Joint Bank Account Lawyers

The term “family law” refers to a set of written statutes (i.e. laws) that cover a broad range of topics involving family disputes. Family law is essentially an area of law that handles family matters, including domestic relationships. Typically, family law issues are dealt with in specialized family law courts.

This is mainly because family law cases often involve children, as well as many different areas of the law, including estate law, tax law, and insurance law to name a few. As such, a specialized court is often necessary for family matters.

As mentioned above, family law covers a wide variety of subjects, including but not limited to:

• The dissolution of marriages and relationships;
• The interpretation of contracts, such as prenuptial or postnuptial agreements;
• Child support and custody matters;
• The division of marital property or joint property;
• Adoption, guardianship, and parenting issues; and
• Domestic violence and abusive relationships.

Of all of the above issues, the division of marital or joint property is often a hotly contested issue in most family law cases. As such, it is important to know the different laws regarding marital property, and how such property may be divided. For example, a joint bank account may be presumed to be owned 50/50 by each party in some states, but not in others.

What Is a Joint Bank Account?

In simple terms, a joint bank account is a bank account that belongs fully and equally by two or more individuals or entities. Typically, each person or entity can legally deposit or withdraw any amount of money from the joint bank account without need for the other’s consent. As such, each name that is listed as an owner or the joint bank account essentially owns the entire account.

Most joint bank accounts also have a right of survivorship. This means that when one party dies, the contents of the account automatically are fully owned by the remaining parties. If the joint bank account was only owned by 2 parties, then the surviving party will automatically become the sole owner of the account. It is important to note that this transfer of ownership will occur automatically and does not require the account to go through probate.

Additionally, the sole owner of the account could also close out the account after the death of the other owner. Further, because the deceased person’s interest in the bank account never forms part of their estate at their death, the assets in the account are exempt from certain estate taxes.

It is important to determine what type of joint bank account that you are creating or have, as not every bank account has a right of survivorship. Joint bank accounts can come in many different forms and involve many different parties. For joint bank accounts owned by multiple parties or entities additional rules may apply. Further, joint bank accounts may also be subject to a contract executed by the parties that opened and funded the account.

What Are Some Different Types of Joint Bank Accounts?

As mentioned above, joint checking accounts may take a variety of different forms, depending on the reason that the account is being created. People choose to use joint checking accounts for a variety of different reasons.

In most cases, there is an understanding between the parties involved that any of the parties listed as owner of the account can only withdraw a certain amount of the money, or can only withdraw money in specified circumstances. Typically, these conditions on the account are established prior to the account creation, either by the financial institution or by contract.

There are several different types of joint bank accounts that may be created by two or more people or entities, including:

• True Joint Tenancy Account: In a true joint tenancy checking account, both parties will have full, equal, and unrestricted access to the contents of the joint account;
• Payable of Death (“POD”) Account: In a payable on death account, one or more owners may own the funds in the account while living, while the other owners of the account will be able to own the funds upon the death of one or more of the owners;
• Transfer of Death (“TOD”) Account: A transfer on death account is a joint account which applies to securities such as stocks or bonds. The securities will transfer to the remaining owners on the account in the death of one of the owners; and
• Convenience Account: In a convenience account, one person is the true owner of the funds in the account, while the other owner’s name is on the account so that they can pay bills or make withdrawals on behalf of the other party.
  • This type of joint checking account is often used for elderly or incapacitated persons.

What Are Some Dangers of Using a Joint Bank Account?

Although there are many benefits to utilizing a joint bank account, there are also many disadvantages. The following is a list of common dangers in using joint bank accounts:

• Abuse of Authority: One of the most common dangers of utilizing joint bank accounts is when one or more of the owners whose names are placed on the account abuses their authority.
  • For example, the joint account owner could withdraw all of the assets from the account and then transfer the assets to a private account, if the account terms provide access for such transactions;
• Divorce or Dissolution of Relationship: If the other owner on a joint bank account is a spouse and a divorce suit is initiated, the funds in a joint banking account may be frozen during the pendency of the divorce case. This is because the funds in the account will be subject to division based on the family laws of the state in which you reside;
• Creditors: Another danger is that the money held in a joint account is owned by each party equally. This means that if one party has a judgment or a debt that is being collected, the assets held in the joint account may be taken to pay that debt or satisfy the judgment; and
• Unintended Survivorship: As mentioned above, the assets held in a joint banking account are not subject to probate. This means that if a will dictates that funds are to be transferred to a party, but one of the account owners dies, the joint bank account rules supersede the terms of the will.

Do I Need a Lawyer for Help With Joint Bank Accounts?

As can be seen, joint bank accounts can become increasingly complex, especially in cases where there are more than two account owners. As such, if you have any questions regarding joint bank accounts it is in your best interests to consult with an experienced estate attorney. An experienced estate attorney will be able to answer any questions you may have regarding opening a joint bank account.

Additionally, an estate attorney may be able to help you come up with a different estate plan if you decide not to pursue a joint bank account. Additionally, an attorney can also help you draft a contract or agreement that specifies the terms and conditions of the account. Finally, an attorney can also represent you in court, as necessary.