Joint Ownership Bank Account Risks

Sharing a joint account can offer convenience and risk.
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Opening a joint bank account can be a convenient solution for handling finances, particularly for spouses. With a joint account, either one of you can pay bills, make deposits or withdrawals, or transfer money where it needs to go without the consent of the other. However, this convenience doesn't come without risk. If the account owners' interests don't match up, seriously problems can happen, including the liquidation of the account.

Total Withdrawal

When you open a joint account, you each have the legal right over the disposition of the entire balance. Either account owner can withdraw all the money at any time. While this is usually not a problem between spouses, if you open a joint account with another party such as a business partner, you run the risk of losing all the money in the account during a dispute. There may be a risk even between spouses, particularly in the event of a pending divorce or other domestic dispute.

Liability to Creditors

Most U.S. states operate under common law, as opposed to community-property law. Under common law, you and your spouse can keep your debts separate, as long as you title the debt under an individual name. However, if your only accounts are jointly named, you may be liable for your spouse's debt after all, even in a common-law state.

For example, if your husband defaults on debt in his name, normally creditors would be able to access only his individual funds. However, if all of your assets are in joint name, they may be legally available for creditors. Some states limit creditor access to one-half of a joint account. However, if you were the main contributor to the account, you would have been better off keeping those assets in a separate, unreachable account.

Beneficiary Issues

When you die, the assets in your joint account will automatically pass to your joint owner. Even if your will states your half of the joint account should go to a different beneficiary, your will is trumped by the laws of joint tenancy. While this automatic passing of assets may be a convenience, holding your bank account in joint name may be a risk if you have other heirs in mind. For example, if you want to pass your money to a child from a previous marriage rather than to your spouse, you will have to take those funds out of joint name.


A more benign but still problematic issue with a joint bank account is the possibility of an overdraft. If you have your own account, you can usually keep track of the money coming into and going out of the account. However, with a joint account, you will not always know what your spouse is doing with the account. If you write a check for the mortgage the same day your spouse pays off an unexpected car expense, your account may be overdrawn if you don't have good communication.

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