- Joint bank account owners have full access to the account at any time.
- If the owner of a bank account dies, the surviving owner has full control of the account.
- Consider whether it is better to add an account beneficiary instead of opening a joint account.
- Read more Personal Finance Insider stories.
Opening a joint bank account is different from open an individual bank account. Both owners have full access to a bank account, and the joint bank account rules also dictate specific actions if one of the owners dies.
We’ll walk you through the rules of survival and walk you through possible alternatives to consider if you decide you don’t want to open a joint bank account.
What happens to a joint bank account when one person dies?
When you open a new bank account, you will receive a bank account agreement that lists the bank’s terms and rules. Many banks have a rule of survivorship in their joint bank account agreement.
The rule of survivorship states that if you open a joint bank account and one person dies, the surviving owner has the right to take over the account.
Sophia Bera, CFP® professional and founder of Generation Y Planningsays that no matter if the deceased owner invested more money, the account would still go to the surviving owner.
“If you have $20,000 in a joint bank account with your boyfriend, you put $18,000 in it and he only put $2,000 in it, and you pass away, that account doesn’t go to your family. It goes to your boyfriend,” says Bera.
Once the surviving owner files a death certificate with the financial institution, the account will be updated and will belong solely to them.
If your financial institution does not specify survivorship rules, you may be able to add a beneficiary instead of. In this case, the surviving owner and beneficiary would have access to the account.
Additional rules to keep in mind with joint bank accounts
When opening a joint bank account, Bera also suggests keeping another bank account rule in mind: equal withdrawal rights.
“Many cohabiting couples who live together, who are not married, consider opening a joint bank account to share expenses,” says Bera. “The scam that people don’t realize until they’re in a bad situation is that if one of you just wants to go to the bank and withdraw all the money in that joint account, you can. It doesn’t mean that 50% of the money be yours in that account.
As a result, you’ll want to make sure you have a strong personal and financial relationship with the other person before opening a joint bank account.
“Both people are using it. It’s harder to know what money is going in and out of it. You could get overdraft fees,” adds Bera.
Alternatives to opening a joint bank account
Bera says she doesn’t recommend joint bank accounts for unmarried couples, as there could be significant differences in how money is managed.
“If one of the owners got into credit card debt and wanted to use that joint bank account to pay off the credit card debt, there’s really nothing the other account owner can do,” says Bera.
Bera also points out that joint bank accounts may not be ideal banking options for family members.
“I’ve seen it both ways. Either the parent is irresponsible or the child is irresponsible with that money,” says Bera.
Instead, it recommends assigning a bank account beneficiary in these circumstances. A beneficiary of a joint bank account cannot deposit, withdraw, or view their bank account while they are alive. They can only access the account when you die.