Joint bank accounts: balancing the benefits and the drawbacks
By ATB Financial 4 October 2019 3 min read
Sharing is caring. Usually. If you are considering the convenience of a joint bank account with someone you love (or someone who is offering to help you), make sure you take some time to ponder the pitfalls too.
What is a joint bank account?
Joint accounts are deposit accounts in which two or more people have rights over the same account. This includes the right for all account holders to deposit, withdraw, or deal with the funds in the account, no matter who puts the money into the account.
How does a joint account work?
As a joint account holder, you share equal access to the account and responsibility for all the transactions made through the account. In most cases, unless you state otherwise, the other account holder can make transactions without your consent.
It is possible to specify that you need the consent of a minimum of two, or of all account holders, to access the funds in the account. This special request must be arranged with your branch.
Joint accounts often include the right of survivorship. This means if one of the account holders dies, the surviving account holder becomes the owner of the account, with the right to deposit, withdraw, and deal with the funds in the account. In this case, the funds may not be considered as part of the deceased’s estate.
Why set up a joint bank account?
It’s common for couples to pay household bills or deal with other shared expenses through a joint account.
A joint account can also be a good option for someone who needs assistance from family members or friends to pay bills and manage their finances. It can be the perfect solution when health conditions or mobility issues make it difficult for someone to manage their banking on their own.
A person may also consider a joint account with a family member (such as an adult child) after the death of a spouse who used to deal with the household finances.
What could go sideways with a joint account?
Unless you stated otherwise in your banking agreement, any person named on the joint account can withdraw money from the account at any time. They don’t need your permission to do so, even if all of the funds in the account were deposited by you.
If the relationship between you and your joint account holder breaks down, you risk the money being withdrawn or the account not being handled in the way you wish. In the case of a separation or divorce, the money in a joint account could be part of the separation or divorce settlement.
It’s difficult to hold a joint account holder legally accountable for taking money they weren’t supposed to from the account. This type of dispute could wind up in court which could be costly, stressful, and take a long time to resolve.
You’ll share responsibility with your joint holder for all transactions made through the account. If one of the joint account holders has financial problems or declares bankruptcy, creditors could make claims on the money in the account.
Removing someone from a joint account
At ATB Financial a joint account holder cannot be removed from the account, except in the case of death. In the event that a joint owner wants to be removed from the account, ATB will need to close the current account and open a new account under the remaining individual’s name only.
Where can I get advice?
It’s important to know your options, and discuss the idea of a joint account with someone you trust. An ATB team member will have plenty of experience and knowledge in this area. Don’t be afraid to ask!