How have you been operating it? I have met a few women who ask me about my views around spouses running a joint account to grow their wealth.
There are many school of thought relating to who is the primary or secondary account holder of a joint account.
Some are of the opinion that joint account should only be applicable to married people; as such the husband should be the primary or principal account holder. Hence he should have unlimited access to the contribution and should manage the account as he pleases.
Some women have a preconceived belief that a joint account ownership with their spouse shows that they are tightly in love and committed.
There is however a common misconception about ownership of joint account funds and these has led many people into trouble.
Ownership of a joint bank account is shared between two people. However, even though they share ownership of the account, some account holders do not necessarily like to share the ownership of the funds in the account. In other words, the mere presence of funds in a joint account for them does not mean that the funds are jointly owned. This distinction may seem like semantics, but it can significantly impact the use of the account funds.
How Joint Accounts Work
Joint accounts work just like regular accounts, except they can have two or more authorized users. Joint accounts can be established on a permanent basis, such as an account for a couple into which their salaries are deposited.
The account may be set up temporarily for the purpose of an investment or a project that has a timeline.
A joint bank account can also be an effective estate planning tool, particularly for individuals hoping that their heirs can avoid the probate process. Nonetheless, caution is warranted. In certain areas in Nigeria, most fathers have a joint account with their first son; where the first son inherits everything after the death of the father.
They do this to avoid the process of writing a will or probate. Here, the father would typically maintain ownership of the funds during his lifetime despite sharing ownership of the account with his son. The son then takes over the ownership of the account at the demise of the father.
Bank accounts held jointly between two parties may be titled with an “and” or an “or” between the account holders’ names. If the account is listed as an “and” account, then both/all parties must sign to access the funds. If it is an “or” account, only one of the parties needs to sign. Accounts that are jointly held include deposit accounts at banks including checking and savings accounts, even mortgages. The joint status authorizes all those listed on the account full use, but also the responsibility for any payments, fees, or charges incurred.
Opening a joint account may also be helpful to newer couples who are combining their finances. Couples may find it easier to have a single account into which they can deposit their paychecks and make payments for their rent or mortgage, bills, or other joint debts.
Both partners to a joint account are considered equal owners, so they both have equal access to the joint account. This holds true regardless of who put the money into the account in the first place (or who has contributed the most money). All money, up to and including the account’s full balance, can be legally withdrawn by any holder at any time.
An elderly parent may find it useful to add one of their children or another authorized user to their accounts in order to pay bills and do routine banking on their behalf if and when they are not able to do so on their own.
Worries of Joint Accounts
Joint accounts can cause problems, however, because they generally provide all parties unlimited access to the funds. Thus, if one spouse has difficulty controlling their spending habits, this may affect the other spouse, who may be more prudent. The prudent spouse cannot challenge the withdrawals or transactions of the other spouse with the bank because they are listed as a joint account holder.
Another thing to keep in mind with joint accounts is that all parties with access are responsible for any and all fees and charges. If your partner runs up your joint credit card, you are equally responsible for paying it back. Similarly, if your joint checking account goes into overdraft, you are both liable for the negative balance.
Legal arguments regarding joint accounts can become very complicated, as both partners are considered to have equal legal right to all money in the account. Even if one person has contributed 100% of the funds and the other has contributed 0%.
If you must open a joint account with anyone, make sure you discuss each party’s responsibilities associated with opening the account before doing so to avoid any unnecessary problems and conflict that may arise.
All parties should discuss the pros and cons of opening a joint account to avoid potential future conflicts.
Do you have any personal experience you will like to share?
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