Pros and Cons of a Joint Bank Account

When planning for the future it can be helpful to create a joint bank account.  Typically you would add a family member or someone you trust to help you pay your bills.  However, there can be some unintended consequences when adding someone to your account.

Benefits of a Joint Bank Account

1. The joint account owner can assist you with paying your bills.  The joint owner has access to the funds in your account just as you do.  They can pay your bills when you cannot.
2. The joint owner will continue to have access to the account funds when you die.  This type of account has a survivorship feature that ensures the surviving owner will enjoy the funds in the account.
3. You can determine who “inherits” the account funds by naming a co-owner.  The joint owner will not have to open up an estate with your local probate court in order to obtain the money in the account.

Disadvantages of a Joint Bank Account

1. You might have intended to name a child as a co-owner only for the convenience of helping with bills.  However, this child will have the right to all account funds when you die.  You may want the funds to be divided amongst all of your surviving children.  Creating a joint account will not get you to that result.
2. Issues can come up if you name a person that has financial difficulties of their own.  If your child has outstanding judgments the creditors can come after any property he/she owns.  Your account would be on of those assets at jeopardy.
3. The joint owner has equal access to your funds while you are still alive.  Only choose someone that you trust to be the joint account owner.

The survivorship feature of joint bank accounts can be very convenient for people who need assistance.  This feature can also be an effective estate planning tool if used in the right way.  A few minutes of planning today can relieve your loved ones from unnecessary delays down the road.