Opening a joint bank account is not difficult. However, agreeing on the form of a bank account that works for you and the other party can be a little more complicated. Before opening a joint account, please make sure you agree with the purpose of the joint account. Determine your monthly budget and decide what to do with the account if your relationship changes or one of you dies.
Apply for a Basic Joint Account
Choose a bank or credit union together. Agree on a place that meets the needs of both parties. If you’re opening an account with someone you live with, consider a location close to you. If you’re opening an account with someone who lives far away, such as a teenager in college, it’s best to open the account at an ATM they can use.
- If you already have an account with the same institution, you’d better open a joint account with them to facilitate transfers.
- If you both want to keep your old accounts but also invest in your community, consider opening a joint account at a local credit union.
Have the documents ready. To open a joint bank account, you will need to bring your ID card (containing your name, date of birth, and address information). Possibly valid files include:
- drving license
- state ID card
- passport
Both parties have their ID cards ready. Both parties will also need to provide some form of identification number. Make sure you know your government-issued ID card. In the United States, you must provide a Social Security Number if you have one. If not, you will need to provide your Taxpayer Identification Number.
Fill out the form together at the selected bank. Check the bank’s website to determine whether you need to go in person, make a phone call, or simply fill out a form online to open an account.
- Go to the bank together to sign documents agreeing to open a joint bank account.
- If you register directly online, you need to prepare documents from both parties.
- If you open an account with a minor and you are his or her guardian, you may be asked to sign a permission application form allowing them to open the account.
Save money together. Determine the minimum amount required to open an account with the bank of your choice. Decide how much each of you will save. You can make a phone call, go online, go to a bank, and make a deposit or transfer money electronically.
- For example, if the bank requires a minimum deposit of $300 and you open an account with a partner, you both need to deposit $150.
Choose a Joint Account
Consider opening a “Joint Tenancy with Right of Survivorship” account. This type of account is the most common type of joint account. Anyone can do it, but it’s very popular with couples. With a “joint tenants with right of survivorship” bank account, all co-owners have equal rights to the account and have equal obligations.
- If one co-owner dies, all funds will transfer to the other surviving co-owners.
- Upon the death of the owner, the account does not need to go through probate.
- Creditors can withdraw the balance from the account regardless of who deposited it.
Select a “fully owned” account to approve every transaction. This option is only available to couples, whether by marriage, civil union, or domestic partnership. Neither party can withdraw money without their permission.
- Creditors cannot withdraw the entire balance of the account, but can only withdraw funds shared by both spouses and must obtain the consent of both parties.
- This account is not subject to probate. If one co-owner dies, all remaining property will belong to the surviving co-owners.
Open a “convenience” account to manage money for others. If you have an elderly or incapacitated relative who needs you to manage their money, you can open a convenience account in their name and act as their agent. The funds in the account belong to the owner. As an agent, you use funds to pay everyone’s bills and manage their transactions.
- Upon the death of the owner, the funds are distributed according to his or her will.
- Creditors can withdraw the account balance. If you are an attorney, the creditor may ask you to prove that you do not own the bank account.
If one of you wants to save your money elsewhere, you can apply for a “joint tenants” account. This type of account is more popular among couples and business partners, but anyone can open one. You can divide ownership equally, or give another owner more obligations and usage rights. You will own the account in a predetermined proportion.
- If one party dies, the estate distributes the balance according to their will or trust.
- This type of account is subject to probate. If there is no will or trust, the deceased’s funds will be distributed to his or her next of kin.
- However, even if one party deposits more money, the creditor can still withdraw the entire balance of the account.
If you both want to leave money to someone else, open a “joint POD/ITF” account. A pay-on-death (POD) or trust-to-pay (ITF) account allows money to be left to a third party after both parties pass away. When one party dies, the balance of the account belongs to the other owner. However, when the last owner dies, the remaining property goes to the previously agreed-upon beneficiaries.
- This account is not subject to probate upon the death of the owner.
- Regardless of who deposited the money, the creditor can still withdraw the entire balance in the account.
Agree on Reasonable Use of Joint Bank Accounts
Agree on the monthly deposit amount. Regardless of whether you have the same amount saved, you need to know how much you should be saving each month. Both of you need to keep your balance at a certain amount, as you’ll both be responsible for any overdraft fees.
- Consider depositing the same amount each month.
- Another fair approach, where incomes vary, is to deposit a fixed amount each month. This feature only works if the balance is above the minimum requirement.
- If this is your only bank account, keep all your funds in it.
Determine what fees will apply to joint accounts. Communicate openly, clearly, and frequently about which expenses can be paid from this account. Consider writing it down so neither of you forgets.
- If one of you is responsible for the bills, you can pay them all from this account.
- A joint account can be canceled if one of the parties uses the joint account to purchase items that violate the agreement, or if it is changed to an “outright joint ownership” account.
Protect your account balances in case the relationship changes. If your relationship sours with the person you share the account with, contact your bank to make sure neither party can withdraw money without consulting the other person. Explain that you want to cancel the entrusted management of the joint account.
- If you have a “full joint” account, you don’t have to worry about this problem, because the co-owners of the account cannot withdraw money without your permission.