Joint Bank Account: How It Works

A joint account is a bank account that can be legally accessed by more than one person. All parties are equally responsible for fees or debt incurred.

Smiling couple checks their joint account on a laptop.

If you have financial goals or expenses in common with another person, a joint bank account could make it easier to manage your finances. But before opening a joint account, make sure you understand how it’s different from an individual account and weigh the potential benefits and drawbacks.

What is a joint account?

A joint account is a bank account that belongs to two or more people[1]. It has most if not all of the characteristics of a standard chequing or savings account. All account holders have the ability to perform banking transactions, such as making deposits and withdrawals, writing cheques and transferring funds.

Joint bank accounts are a popular option for couples because they can make it easier to track shared expenses and savings goals. They can also be useful for parents, older children, business partners or roommates.

How a joint bank account works

A joint account gives all account holders equal access to any funds it holds, so they can each make withdrawals, pay bills and transfer money. For example, a couple might use a joint chequing account to pay shared expenses such as a mortgage payment and utility bills, or use a joint savings account to stash money for a future vacation.

All people listed on a joint account share full responsibility for the account. If one person overdrafts the account, all account holders can be held responsible for resulting fees or debt that accumulates. Similarly, one account holder could withdraw all the money, even without the consent of other account holders, and there would be no legal recourse. That’s why it’s vital to only open a joint account with someone you trust and have a robust agreement about how you’ll use it.

Types of joint accounts

Chequing and savings accounts are the most common joint accounts.

Many traditional banks, online-only banks and credit unions offer joint account options.

Pros and cons of a joint account

Pros

Makes it easier to manage household expenses and bills.
More transparent financial management.
Can help with estate planning; if one account holder dies, the account already belongs to the other account holders (may vary based on provincial/territorial laws).

Cons

All account holders are equally responsible for debts or fees incurred.
Financial transactions and bank statements will be accessible by all account holders.
One account holder can withdraws money without permission from any other account holders.
Could be problematic if the relationship between account holders deteriorates.

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What happens to a joint account in case of death or divorce?

The terms of the banking agreement and the laws in your province or territory dictate what happens in the event of death or divorce.

If the terms grant a right of survivorship, the funds in the joint account transfer to the surviving account holders, such as the person’s spouse or children. However, if there is no such agreement, the funds may become part of the joint account holder’s estate, which can become very complicated.

In Quebec, joint accounts are frozen until the account holder’s estate is settled, so even their spouse isn’t able to access those funds[2].

If joint account holders divorce, the account may be dissolved and the assets divided as part of the divorce settlement.

Alternatives to a joint account

Some financial institutions may allow you to add an authorized user to a bank account. This person, sometimes referred to as a secondary signer or convenience signer, may then have the ability to make deposits and withdrawals, but they wouldn’t have the same legal rights or responsibilities as a joint account holder.

Likewise, some banks may allow you to name a beneficiary for your individual account. This person wouldn’t have any access to your account or funds while you’re alive, but would receive those funds in the event of your death.

Depending on the situation, a power of attorney may also be an alternative to a joint bank account. A power of attorney is a legal document in which a person gives someone else control over their finances and property while they are still alive. Like opening a joint account it’s important to make sure you’re choosing someone who is reliable and trustworthy before assigning power of attorney.