Joint Accounts: What You Should Know

If you share financial responsibilities with a loved one, a joint account can be a convenient way to manage expenses together. While the ease of shared access makes it an appealing option, consider whether it aligns with your financial situation first. To help, we’ve outlined what a joint account is, its benefits and considerations to keep in mind.

What is a joint account?

A joint account is a bank account shared by two or more individuals. This can include checking and savings accounts, as well as credit cards and mortgage loans. While holders are typically couples, business partners or family members, joint accounts can be held by anyone.

All parties involved on the joint account have equal ownership and access to make deposits and withdrawals from the account.

What are the benefits of joint accounts?

Convenience is the major benefit of having a joint account with an individual you have shared expenses with or someone whose financial affairs you manage. Two common scenarios we see:

1. Couples who live together. Couples have many shared expenses, such as rent or a mortgage, home or renter’s insurance, groceries and utilities. Setting up a joint account can help seamlessly pay for these expenses together.
2. Children managing their aging parents’ finances. Children added to parents’ accounts can write checks, as well as withdraw and deposit funds, without needing their parents’ permission. This is helpful when parents are unable to manage their finances, ensuring important payments and deposits are handled. Additionally, when the parent passes, the child continues to have access to the funds, simplifying matters during a difficult time. An alternative is to add a child only as authorized signers, which gives them the authority to make withdrawals and payments until the parent has passed.

What to consider before opening a joint account

Before you open a joint account, know that funds in the account are equally held by all holders. Even if one individual is contributing most of the funds, they are still equally owned. The funds are also subject to garnishment – the legal process of collecting money to pay off debt, loss in a lawsuit, a dissolution of a marriage, and other financial dues. All funds in a joint account are subject to collection even if only one of the account holders is being subjected to a garnishment.

Another aspect to consider is generally you can’t remove an individual from a joint account unless they are deceased (in which case a death certificate is needed to remove them). If you wish to have an individual account but others on your joint account are still alive, you typically must close the joint account, open a new individual account, and transfer the funds. A joint account may simplify the process of managing shared expenses with a loved one, but be mindful of all aspects before opening one. Speak with a banker to decide whether a joint bank account is right for you.