Joint Account

A joint account (or shared account) means sharing one savings account with more than one person with an equal claim over the funds in the account for personal or business purposes. It aims to share the household's expenses, monitor spending by minors, and hassle-free operation of finances by couples, parents, and businesses, respectively.

Joint accounts remove the intermittent problem of fund transfer between one account to another. One saves and spends together without any difficulty. Old parents can get their accounts operated easily through their children. Even if one account holder passes away, the other can operate it without legal issues. 

• A joint account is an account opened by two or more individuals for personal or business needs to manage their finances and expenses within budget. It removes the inability of old, disabled, and minors to have and operate a bank account for their financial needs.
• It is quite easy to open a shared account, just like a savings account but requires documents of all the persons involved in account opening.
• The five types of joint accounts include - either survivor or jointly, joint tenants with rights of survivorship (JTWROS), tenants in common (tic), and joint tenants. 
• It has many benefits, like the ease of operation by two people and controlling the expenses within the household or business budget.

A joint account is a special account type where two or more persons open a savings account jointly in a bank per their needs. Joint account savings function like an ordinary account but have two or more people operating it. Its prime advantage is the ease of operation for a single person without needing other joined members to go to the bank. In addition, as two or more people operate the account, the need for a nominee in the account is absent.

Older adults who cannot walk or pay a visit to the bank for their account operations or manage their accounts open a shared account with their young children. Married couples with different savings accounts corresponding to their salaries open shared accounts to manage household expenses and savings together. Many parents get their minor children to open their accounts jointly with themselves to facilitate monitoring of expenses and facilitate them monetarily while away from home for education or vacation.

The following are the principles that members need to adhere to as joint account holders:

• Every joint member is liable to bear the responsibility of account operations.
• Any member can make all the deposits in the account.
• Banks can issue checks to the account holders.
• Members share the checking and savings accounts. 
• Banks jointly hold credit card payment responsibilities.
• Loans are also jointly held. So, in case of any loan or credit card default, banks hold every member responsible.
• Any legal action affects each of the account holders.
• All the account charges, debit cards, and credits get jointly borne.
• Minor can also get to operate a bank account.
• Anyone can open a shared account by providing the required documents. 

Federal Deposit Insurance Cooperation (FDIC) ensures that joint account holders increase their total coverage.

Opening a shared account is similar to registering for a single savings account; both require the submission of the following:

• Identity & address proofs
• Social security numbers
• Passport-size photos
• Signature specimens
• Filling up the account opening form under the shared account
• Selecting the account's mode of operation while filling up the account opening form

All the individuals involved in the shared account opening process must submit these documents.

However, one difference uncommon from the savings account is that shared accounts do not require any nominee of the account holders. 

Users may select any joint account best bank according to their needs by analyzing banks' features. For example, Barclays joint account is a joint account bank that provides many features and specialties. Hence, one can get a shared account opened in the Barclays account for personal and business needs.

Here are a few joint account types that can benefit the account holders.

 #1 - 'Either' Or Survivor

Under this type, two or more account holders can operate the account, issue a check, pay the bill, and withdraw money without others signing or approving. Most couples have this functionality in their accounts.

#2 - 'And' Or Jointly

Jointly bank accounts may be titled as 'or' or an 'and' between the account users' names. Under the 'and' type of account, the shared account has to be operated jointly with the account holders. No account can operate the account or withdraw funds without the signature of other shared account holders. It usually gets done for old-age parents and minor accounts that require monitoring.

#3 - Joint Tenants With Rights Of Survivorship (JTWROS)

Under this type, when one of the account holders dies, the assets of the shared account go to the other survivor, exclusive of probate, as per the existing rule of law. 

#4 - Tenants In Common (TIC)  

Under this category of the shared account, each joint holder can have a different beneficiary for their share of the asset. As a result, the assets of the deceased account holders pass to the beneficiary instead of the second account holder. Moreover, the split of the assets may not get done in equal halves; instead, it gets distributed as per the mandate given by each account holder.

#5 - Joint Tenants

Under this operation, one gets to split the assets in the shared account into two halves for each account holder.

Having a joint account can have many benefits to the family as well as account holders. The benefits of a shared account are the following:

• Simplifies the management of expenses like rent, bills, and loan payments.
• Allows control over household budgets as all expenses and bank deposits can be tracked and monitored in one place.
• Benefits married couples to share their income in one place with different incomes. 
• Ensures equal sharing of burden and cost of household shopping among the family members.
• Maintains minimum account balance as best as banks require and avoids penalties for singly managed accounts.
• In case of death, the other joint holder can easily operate the account without legal issues.
• Illiterate persons can also open accounts jointly with a literate family member and enjoy the safety and benefits of bank accounts.
• Senior citizen who get too ill or weak to go to the bank to withdraw or deposit funds can easily operate their account by adding their young children as shared account holders.

However, opening a joint account also has downsides, like trust issues and attachment of account by the government in case of fault by any account holder. Hence, one should be fully aware of the pros and cons before opening a shared account.

This article has been a guide to What is Joint Account and its meaning. Here, we explain its formalities, types, and benefits. You can also go through our recommended articles on corporate finance –

• Checking Account
• Dormant Account
• Managed Account