Investing 101 › Joint < Investing 101

Joint Accounts

So, what is it exactly?

A joint account is a lot like what it sounds like: a bank account, brokerage account, or similar that has more than one owner. Married couples often have joint accounts, as do business partners. It gives people access to money, investments, or the like without having to ask permission of a spouse or co-owner.

These accounts are also often also used by people who want to help an elderly parent or family member with his or her finances. You can pay your grandmother’s bills using her pension assets.

What are the pros?

Joint accounts often make things simpler. No more dividing bills or writing checks to your spouse or partner. They’re an excellent way to have transparency in a financial relationship.

Plus, since both people have access to the accounts, if one account holder dies, the other will have no problem withdrawing the funds since he already has access to the account. Without a joint account, a widow(er) would have to wait for a will to move through the courts before they could access their late spouse’s account.

Is there anything to be careful about?

The primary advantage of having a joint account is also its main disadvantage: Other people have access to your money. All account holders having equal ownership and rights to the account means any of them have the right to simply withdraw some—or even all—of the assets.

Plus, 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.

The bottom line: Have a joint account only with someone you really, really trust.