Can You Put a Relative Besides a Spouse on a Joint Account?

Published on Nov 06, 2013 06:03 am

Can You Put a Relative Besides a Spouse on a Joint Account?No law prevents you from holding a bank account jointly with a relative other than your spouse. In fact, the joint owner could be a friend, a business partner or anyone else for that matter. However, anytime you’re combining finances, you should understand that joint ownership comes with certain rights and presumptions that you should be aware of when considering adding anyone to your account.

Questions of InheritanceWho inherits the account if you die depends on how the account is titled. Joint tenants with right of survivorship, common with spouses, automatically inherit the joint owner’s share of the account. While this is just one type of asset that will need estate planning, you should check with your personal banking intuition or financial advisor to decide what path right for you.

Tax ComplicationsAdding another relative to your account as a joint owner could subject you to gift tax on half the account if it exceeds the annual gift limit. However, gift tax doesn’t apply between spouses. Also, one person must be designated as the primary owner of the account and provide a tax ID for federal income tax. If you’re that person, you will receive the 1099 and be responsible for reporting and paying taxes on all the income. That’s not an issue for spouses, but if the joint owner is another relative, you’ll have to decide if that arrangement works or somehow try to collect part of the taxes applicable to that income from the other person.

Access to FundsIn order to be insured by the FDIC, each bank account owner must have equal access to all the funds. This means that your relative can withdraw or write a check for any amount, at will, without your permission. If you later decide you don’t want that person to be a joint owner, you can’t remove her. You would have to close the entire account with all the inconvenience that entails.

Subject to CreditorsProbably the biggest issue when considering adding a relative to your account is that the entire account is subject to the creditors of all owners. This includes tax liens. It’s recommended discuss all details of past financial and credit behavior with whom you plan to open a joint account.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from, Inc.  © 2013, Inc.  All rights reserved.

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