People find joint bank accounts convenient. They allow spouses to pool money for common expenses, while an elderly person might rely on a joint account to enlist the help of adult children with finances. Making someone a joint owner typically means providing complete access to the account, including the ability to empty it on demand. Those who feel wary about the risk can choose to include restrictions when the joint account is first opened.
Those who want to restrict a joint bank account can restrict survivorship, require dual signatures, open a restricted account or use a joint convenience account.
No Right of Survivorship
In most cases, every joint account holder equally owns the money. This means that the death of one account holder leaves the survivor with all of the account’s funds. Such accounts are called joint tenants with rights of survivorship – JTWROS for short.
The prospective account holders can open it as a tenancy-in-common account to restrict survivorship on a joint account. Each person would only own part of the account, either equal or unequal shares, depending on what the owners specify up front. In the event of death, an owner’s share is left to whoever is named in his will.
Requirement of Dual Signatures
To restrict each account holder’s ability to independently withdraw funds or to close the account, the owners can open a joint account that requires two or more signatures for withdrawals, depending on the number of account holders. The paperwork would link the names in the account with the word "and" rather than "or." Printed checks might say, “Jane and John Jones.” This requirement won’t prevent a determined account holder from raiding the account by way of an automated teller machine card, however, or even a check because banks process most checks automatically, without a signature check.
Tenancy by the Entirety
Banks in some states offer a restricted account known as tenancy by the entirety. Only married spouses can create such a bank account. Although the particulars of these accounts can vary by state law, a creditor of only one owner-spouse cannot generally go after funds in the account. The account features the right of survivorship and may require two signatures for withdrawals.
Joint Convenience Account
An owner can open a joint convenience account or add someone to an existing account as an authorized signatory if he wants to grant someone the ability to conduct transactions on the account but not give him ownership of the funds. This is called a power of attorney, and it gives the appointed person the right to manage your affairs. A power of attorney is often used when an elderly individual needs assistance paying bills or when a couple will be out of town and they require help managing their affairs while they are away. The signatory might also be referred to as an agent.
The signatory’s account access ends when the account owner revokes permissions or dies. There is no right of survivorship because the authorized signatory was not an owner of the account, nor can the signatory’s creditors go after the funds. A convenience account may also be used where a signatory already has power of attorney over the account holder.
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