Married couples have joint interests, expenses and goals, so the joint bank account makes sense for some. Many couples choose to maintain joint bank accounts while also keeping separate accounts. Others choose to have only joint accounts, both checking and savings. Experts weigh in for and against the idea. Whatever your choice, forewarned is forearmed. Many of the legal implications for owning a joint bank account are the same whether the owners are married. Some legal considerations apply only to married couples. You can know and prepare for the legal risks, responsibilities and benefits.
Joint Bank Accounts
When married couples open joint bank accounts, both partners have unrestricted access to the account and to the funds. Both spouses are equally responsible for account activity and are equal owners of the funds in the account. Both are liable for activity and fees for the account. Banks do not place restrictions on joint accounts owners. Couples cannot restrict the amount of money one spouse can withdraw or implement other controls over use of the account. Bank rules for closing joint accounts vary, as do procedures for removing one spouse from the account. Check on bank’s policies for closing the account or removing one person from the account. Both are liable for overdrawn accounts, fees and other costs.
Couples who open joint bank accounts create marital property that is jointly owned by each partner. In common-law states, which make a distinction between marital and personal property within the marriage, both spouses own equal interest in the account. In community property states, of which there a just a few, each spouse owns half of all marital assets acquired during the marriage, including the funds in a joint account. A spouse in a community property state may move his interest in the joint account without notifying the other spouse and with no requirement for her signature. Whether the state is common law or community property, the funds are owned equally regardless of how much money the spouses deposit individually. The money deposited in the joint account is marital property. Items paid for from the joint account are marital property.
Personal Property and Transmutation
Marriage partners can own personal property outside of marital or community property. In community property states, property owned before the marriage is personal property. In common-law states, personal property is attributed to one spouse if one name is on the ownership paper, the item was a gift to one spouse or one spouse purchased the item with personal funds. In common-law and community property states, inheritances and personal injury awards are personal property. Personal property is transformed into marital or community property, an occurrence known as transmutation, when the property is mixed with marital property. For instance, depositing an inheritance or other personal funds into the joint account transforms the property into marital or community property and confers half ownership of the funds to the other spouse.
Liabilities and Right of Survivorship
Although state laws vary, debt collectors can usually seize the funds in a joint account to satisfy either spouse’s debts or financial obligations, such as child support, taxes, loans and unpaid bills. Death or divorce can result in the bank barring access to a joint account until ownership is determined. In community property states, there is no right of survivorship so the funds in the joint account undergo probate when one spouse and account owner dies. In common-law states, the surviving owner of the joint account becomes the sole owner and can usually avoid probate.
- Family Education: Joint Checking Accounts
- NOLO: Separate and Community Property During Marriage: Who Owns What?
- FindLaw: ABA Family Legal Guide - What is the Community Property System
- Rochester Family Lawyer: Joint Bank Accounts and Creation of Marital Property
- Legal Services for the Elderly: The Hidden Dangers of Joint Bank Accounts
Gail Sessoms, a grant writer and nonprofit consultant, writes about nonprofit, small business and personal finance issues. She volunteers as a court-appointed child advocate, has a background in social services and writes about issues important to families. Sessoms holds a Bachelor of Arts degree in liberal studies.