Using a joint bank account with a right of survivorship is common with married couples, but this type of account can lead to some difficulties. With this type of account, both parties who own the account have equal access to the funds. When one person dies, the money goes to the other person.
Difficult to Close
One of the potential problems of a joint bank account with right of survivorship is that it can be difficult to close. If one person wants to close the account, she will need the permission of the other accountholder. If both parties are not in agreement about what to do with the account, it can lead to problems. In this case, the account may remain open even though no one is using it.
No Creditor Protection
A joint bank account with right of survivorship does not offer any creditor protection. When one person who has ownership of the account gets into credit trouble, he could have a judgment issued against him by the court system. When this happens, part of the money could be taken out of the account through a bank levy. The money removed from the account may not have been contributed by that person, but since his name is on the account, the creditor can take it.
Either Party Can Take Money
When two individuals use a joint bank account, each person has an equal right to the money in the account. It does not necessarily matter if one person puts 90 percent of the money in the account and the other person contributes 10 percent. Both of them have the right to take out 100 percent of the money at any given time. This means that one spouse could take all of the money and run if he chose to do so.
A joint bank account will usually have to go through probate when the owners pass away. This means that the beneficiaries of the estate will have to wait for the probate court to distribute the assets. It also means that the account will become part of the public record, as is the case with all probate assets. If you would like to pass on assets to another person, a payable-on-death account may be a better choice. With this type of account, assets do not have to go through probate before they are passed on.
- Financial Web: Pros and Cons of a Joint Bank Account
- Wallet Pop; Joint Bank Accounts -- What You Need to Know; Geoff Williams; May 2010
- Bankrate.com; Risks of Joint Bank Accounts; Roxanne Hawn; May 2010
- Bank of America. "Our First Bank Account." Accessed April 20, 2020.
- Consumer Financial Protection Bureau. "A Closer Look: Overdraft and the Impact of Opting-In," Page 1. Accessed April 20, 2020.
- Code of Virginia. "§ 6.2-606. Ownership During Lifetime; Garnishment, Attachment, or Levy." Accessed April 20, 2020.
- Consumer Financial Protection Bureau. "Either Person on the Joint Account Generally Has the Right to Move Funds or Close the Account." Accessed April 20, 2020.
- University Credit Union. "Membership Agreement." Accessed April 20, 2020.
- BBT. "Bank Services Agreement," Page 7. Accessed April 20, 2020.
- Wells Fargo. "Opening and Closing Accounts Questions." Accessed April 20, 2020.
- GreenState Credit Union. "Closing Your Account." Accessed April 20, 2020.
- Suntrust. "Rules and Regulations for Deposit Accounts," Page 28. Accessed April 20, 2020.
- Bank of America. "Telling Your Bank It’s Over." Accessed April 20, 2020.
- Washington and Lee Law Review. "Virginia's Equitable Distribution Law: An Owner's Manual," Page 9. Accessed April 20, 2020.
Luke Arthur has been writing professionally since 2004 on a number of different subjects. In addition to writing informative articles, he published a book, "Modern Day Parables," in 2008. Arthur holds a Bachelor of Science in business from Missouri State University.