Joint Checking Account Rights

Even if you and your partner share everything else in your lives, sharing a checking account is a big step. It's a big step no matter who you open the account with -- a spouse, a business partner or a parent who needs help paying his bills. The law gives you and your co-owner equal rights on the account, and that can be dangerous.


You and your partner have equal rights to every dollar in the account. Even if you contribute 90 percent of the money in the account and she puts in 10 percent, she still has the right to draw out 100 percent of the money. She can do it for whatever reason she wishes -- investing, spending, paying off debts -- and she doesn't even have to tell you. Of course, if you don't keep each other informed, the checkbook's going to become unbalanced fast.


Most banks set up joint checking so that owners have the right of survivorship: If your partner dies, everything in the account goes to you, regardless of his will. If that's not what the two of you want, ask the bank if it can set up the account as a tenancy in common. That way, you and your co-owner have the right to leave half of the account to anyone you want. This can be a problem if one of you dies unexpectedly: to make sure the other doesn't deplete the account, the bank may freeze account until after probate.


If your co-owner loses a lawsuit, files for bankruptcy or gets a divorce, that may give someone else rights to your joint account. A creditor who wins the right to garnish your co-owner's bank account can take your money out of joint checking along with hers. You may be able to protect yourself by keeping careful records to show exactly how much of the money is yours. If you can't, your co-owner's bad debts become your problem.


Maybe you can't imagine that someone you love and trust would siphon your hard-earned money out of a joint account. The truth is, it happens every day: spouses rip off spouses and kids cheat parents. One useful precaution is to keep a separate account as well and not put more into the joint account than the two of you need to have in there. Another safety tip is to check the account online every so often and watch for any unusual transactions. If you find them, talk to your co-owner about what's going on.

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