What's a joint account?

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Andrew Goldman

Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. Television appearances include NBC's Today show as well as Fox News. Andrew holds a Bachelor of Arts (English) from the University of Texas. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier. In his spare time, he hosts “The Originals" podcast.

A joint account is a bank account or brokerage account opened by more than one owner. Married couples often have joint accounts, as do business partners, as well as aging parents who need their adult children to handle their finances.

Opening a joint account gives people access to money, investments, or the like without having to ask permission of a spouse or co-owner. Besides the ease factor of being able to pay bills from one account, joint accounts frequently also have a practical advantage. For instance, should one holder of the account die (or becomes incapacitated) there's something called “right of survivorship.” Without a joint account, the surviving account holder would not have legal access to the account.

But, of course, the primary advantage of a joint account also happens to be its main disadvantage: Other people have access to your money. All account holders having equal ownership and rights to the account means that each of them has the right to simply withdraw some — or even all — of the assets. This has (more often than you might think) become a problem for joint account holders when their relationships or partnerships have gone south.

The other potential downside of a joint account is that any liabilities associated with your account are also co-owned, whether it’s being overdrawn or making a bad decision in the stock market. Likewise, creditors can seize a joint account to pay one party’s debts, regardless of whether the other party has anything to do with that debt. So if you happen to have inadvertently married an unsavoury grifter, understand that your joint account assures that both your credit scores will be on the line. Generally, when opening a joint account at any institution, both account holders will need to provide at least one government-issued source of identification as well as a signature.

If you're considering opening a joint account, consult a tax expert first to see if it's the right thing for you.

Last Updated August 21, 2018

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