Joint Accounts

Needham & Joint Accounts

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Pros of Joint Bank Accounts
The primary benefit of a joint bank account is that sometimes two or more heads are better than one. Sharing a joint bank account can provide different benefits for different relationships:

Married couples and domestic partnerships. Couples can pool their resources in a joint account to save money toward a common goal, like a vacation, or pay shared household expenses, like utilities, rent or a mortgage.
Parents and children. Joint bank accounts can help parents instill good financial habits in their children. Parents can easily monitor transactions and spending habits with joint checking accounts while teaching kids to use checks and debit cards. For those with kids away at college, joint bank accounts can help expedite cash transfers for unexpected expenses.
Aging parents and their adult children. Joint accounts can help adult children manage their parents’ finances, including bill payments and medical expenses, even from a distance, as needed.
Business partners. Joint bank accounts make it easy for business owners to share financial responsibilities, like paying vendors and making incidental purchases like office supplies.
An added bonus for a joint account is that you may find it easier to meet your bank’s minimum balance requirement that’s necessary to waive fees and enjoy higher interest rates on your funds with more than one account holder.

Joint accounts also can protect account holders in the event of death, as the majority are established with “rights of survivorship.” When one account holder passes away, this feature allows another joint account holder to retain access to the shared account. Without survivorship rights, legal procedures could restrict access to funds for funeral, estate and other timely expenses.

In summary, joint bank accounts can simplify finances and offer virtually any relationship the ability to save and spend from a single account. This can, for example, make budgeting with a spouse easier than reconciling separate individual accounts each month.

Cons of Joint Bank Accounts
In some situations, certain beneficial features of joint bank accounts could become complications. Here are some scenarios to keep in mind as you consider whether a joint bank account is right for you:

Access. A single account holder could drain the account at any time without permission from the other account holder(s)—a risk of joint bank accounts during a breakup.
Dependence. With parent and child accounts, children could become overly reliant on parents to add funds to make up for poor spending habits.
Inequity. In households where incomes between partners differ, one account holder could feel they’re contributing more or less. Without a good pattern of communication about financial issues, this could lead to arguments.
Lack of privacy. With joint accounts, all account holders can see every transaction in the account. This could create a level of visibility that makes one or both potential account holders uncomfortable.
Shared liability. If one account holder mismanages funds, the other account holders are liable. Creditors also can come after funds in a joint account to satisfy one account holder’s debts, regardless of who deposited the funds in the account.
Reduced benefits. If parents open a joint bank account with their child, the assets in the account could reduce awards for college financial aid. The same applies to accounts that adult children have with aging parents, because how money in a joint account is used could impact a parent’s eligibility for Medicaid.
If you’re considering opening a joint bank account, it’s vital to trust those who share ownership. Without trust, a joint account could create more headaches than help.