Considerations when Opening a Joint Bank Account with a Spouse

open a joint bank accountContrary to what many couples believe, opening a joint bank account is a big financial step. This signifies trust in each other, as well as confidence that the other person is going to act responsibly. Most couples who are interested in opening a joint account are newlyweds. Of course, this is not always the case. If you are in the process of doing this, here are some things to think about:

1. Select a bank. Are you going to use your bank or the one your spouse has always used? Or will you seek out a new institution altogether? While this may seem like a meaningless detail, it is actually quite important. You may find that your spouse is attached to his or her bank, and is not willing to open an account anywhere else. Would this bother you? Money Crashers recommends looking for a trusted, local bank or credit union in your area, rather than choosing a mega bank. With credit unions, the members own the bank, so you’ll find more personalized customer service, and credit unions often offer better underwriting guidelines to help you qualify for a mortgage or car loan.

2. Did you know that there is more than one type of joint account? This is something you definitely want to discuss with the bank that you choose. The most common type of joint account among married couples is known as “joint tenants with rights of survivorship.” In short, this means that all assets of the account will be passed to the other person should one die. There are two other types of joint accounts: 1) “Tenant in Common” means that if one person dies, half of the assets go to the other person while the other 50 percent reverts to the deceased estate 2) “Tenancy by the Entirety” means that both parties must sign and approve any transactions on the account. This includes deposits and withdrawals.

3. Fill out an application. Although opening a joint account is simple enough, you will have to fill out some paperwork. But don’t worry, if you have any questions, a bank representative will be able to help. On your application, you will be asked for basic information such as your name, social security number, address, and employer. Along with this, you may have to answer more detailed questions such as who is the beneficiary if something should happen to both parties. As noted above, you will also have to choose what type of joint account you are interested in. A mistake here could be very costly. The point is to fill out the application carefully and don’t be afraid to ask questions to the representative.

Warning: Never open a joint account with your boyfriend/girlfriend or fiance. Just because you plan on getting married or are so in love with your significant other doesn’t mean that it’s always going to work out. Once you’re married, you have a binding contract in place that will legally protect you financially, but not when you’re just dating. Don’t open a joint account with anyone unless you’re married!

The above details are based around the actual process of opening a joint bank account. They are all very important, but there are other things you have to think about. On a personal level, are you ready to open a joint account? If not, then there are some underlying issues that you and your spouse must work out before you open the joint account. It’s never a bad idea to seek some marriage and financial counseling with your spouse if you have trust issues when it comes to money. Opening a joint bank account with a spouse is nothing to take lightly. This is a big step in your life, and you should treat it as such. I know that joint checking accounts with your spouse is a heated debate, but our stance is that you should always combine your money as a married couple. You are a team now. Two have come together to be one. If you want separate accounts for play money or whatever, that’s cool, but the majority of your household income should flow into one joint account where you and your spouse have a budget and a plan for that money, together as a team.

(photo credit: Daniel Y. Go)

  • Meghan

    These are definitely good points.

    I don’t think it’s always wrong to open a joint account with someone else though. Just don’t throw all your money in there. I think if you are living with someone (a girlfriend or boyfriend or even just a roommate) it may be OK to set up a joint account where you both put a certain amount of money into to pay bills out of, buy food, etc. It makes it a little easier to handle the money aspect of your relationship when you both know there’s a certain amount going into that account and it will be used for certain things.

  • Kelsey H

    I was thinking the same thing. I was a bit surprised that the author 100% was against opening a joint account, ever. Just because a joint account was opened, it doesn’t mean that it’s the only account either person will have access to. In a long-term cohabitation situation, it would make dealing with bills much easier if one check could be written out for rent, and one for electricity, etc. There’s always a risk involved, but if you open a joint account for money-in money-out type of deals, then I see really minimal risk. Just make sure the account doesn’t have a line of credit attached, and don’t use the account to store money.

  • Candace

    I agree. My fiancé and I have been dating for over 5 years and we both survived college together, commuting together to the same school and we see each other practically everyday! We are extremely close and practically share money already for all kinds of bills and expenses like food, gas, entertainment, etc. Since we are going to be “officially” moving in with each other after college, I think it would be a good time to get a joint account, since the only thing stopping us from getting married is that we want more than just a courthouse marriage, but neither of our families will be contributing anything to a wedding ceremony, so we have to save our own money for that. For these reasons, I don’t see the harm in setting up a dedicated account to pay rent, utilities, bills with as long as we get to keep whatever else we earn in our own separate personal accounts as savings. I think it is only fair, since in every practical term we are married, but unfortunately you can’t get married twice to the same person without a stupid divorce in the middle!