There are several benefits to opening up a joint bank account with a partner or spouse. For one thing, if you and your partner share bills, then it's easy to have a single checking account you dip into to pay those expenses. And if you're working toward specific financial goals together, like buying a house, it helps to have your money in a joint savings account.
Plus, opening a joint bank account gives you more FDIC insurance protection. When you open an account on your own at an FDIC-insured bank, you're granted up to $250,000 worth of protection. But that limit rises to $500,000 when you have a joint account ($250,000 per account holder).
However, if you're going to open a joint bank account, then it's important to be on the same page about how you manage it. And that generally means consulting one another before taking a large withdrawal.
You can take withdrawals on your own
When you have a joint bank account, you don't need your partner's permission to take a withdrawal. You can remove funds from that account on your own, and your bank won't ask for verification that the other person on the account is okay with that transaction.
But just because you can make an independent decision to withdraw money from a joint bank account doesn't mean you should. If both you and your partner have contributed to that account, then you both deserve to have a say in how that money is spent. And if you don't consult one another, you could end up with a financial mess on your hands.
Let's say you remove $1,000 from your joint checking account to put down a deposit on a home improvement project without consulting your partner. It may be that they just wrote a check for $2,000 to cover a big car repair, but you may not have realized that. Without discussing payments with each other, you risk overdrawing your account.
But even if you don't end up in that specific situation, not discussing large withdrawals with one another could damage your relationship. And that could have serious consequences.
When money becomes a source of conflict
The Jimenez Law Firm says that for every 10 U.S. marriages that end in divorce, four are due to money matters. You don't necessarily need to consult your partner if you're removing $80 from your joint bank account to buy groceries or pay the water bill -- those are ongoing expenses. But you probably should talk to your partner before taking a $700 withdrawal to update your wardrobe.
And it goes both ways. Any time you're looking to take a withdrawal for something that isn't a recurring bill, or a joint bill you both know about, it's best to have a quick conversation to make sure both of you are on board. If you keep removing funds without consulting each other, you might not only whittle down your account balance, but create a scenario where there's loads of resentment. And that's not what you want.
So sit down and come up with a plan for managing your joint account together. It could work wonders for your finances, as well as your relationship.
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FAQs
The money in joint accounts belongs to both owners. Either person can withdraw or spend the money at will — even if they weren't the one to deposit the funds. The bank makes no distinction between money deposited by one person or the other, making a joint account useful for handling shared expenses.
Can you get in trouble for withdrawing money from a joint bank account? ›
Many couples have joint bank accounts during their marriage. Each spouse has the right to make deposits into the account. Generally, each spouse has the right to withdraw from the account any amount that is in the account. Spouses often create joint accounts for practical and romantic reasons.
Is it stealing if you take money from a joint account? ›
If an account is under both names, either party has the right to ALL of the funds in that account at any time. Therefore there is no theft if the person is removing something that they are entitled to have.
Can you withdraw money from a joint account? ›
A joint account functions like a standard account, such as a checking or savings account, and allows anyone named on the account to access its funds. All owners can withdraw cash, write checks, and make online payments.
Can a spouse take all the money out of a joint account? ›
Many married couples have joint bank accounts. Each spouse has the right to make deposits into the account, and, each spouse has the right to withdraw from the account any amount up to the total balance. It's common for married spouses to have joint accounts for practical and romantic reasons.
What are the rules for withdrawal from joint bank accounts? ›
Each account owner can get a debit card, write checks and make purchases. Both account holders can also add funds or withdraw them from the account. The money in joint accounts belongs to both owners. Either person can withdraw or spend the money at will — even if they weren't the one to deposit the funds.
How much money can I withdraw from a joint bank account? ›
If the joint account earns interest, you may be held liable for the income produced on the account in proportion to your ownership share. Also any withdrawals exceeding $14,000 per year by a joint account holder (other than your spouse) may be treated as a gift by the IRS.
Are joint bank accounts protected? ›
Most joint accounts are protected by the Financial Services Compensation Scheme (FSCS).
Can the IRS seize money from a joint bank account? ›
Levy on Joint or Third-Party Bank Accounts
The IRS may levy the funds in a joint account if the taxpayer can withdraw funds. Even when a non-liable account owner made the deposit, the IRS may proceed with the levy. The non-liable third party may contact the IRS to claim ownership of the funds.
Why are joint bank accounts bad? ›
Cons of joint bank accounts
If one holder lets debts go unpaid, creditors can go after money in the joint account. Both holders can see transactions in the account, which can present privacy issues.
Drawbacks:
- Shared Responsibility: Joint accounts require a high level of trust and financial responsibility. ...
- Ownership and Liability: Both account holders are equally liable for any overdrafts, debts, or liabilities associated with the account. ...
- Privacy Concerns: Joint accounts lack privacy.
That means you cannot empty your joint account unless your spouse consents or you get a court order first. If you are considering divorce, it's important to prepare financially. Our attorneys can advise you regarding what information you need to gather and how to address your fears of having no funds.
Who is the primary account holder on a joint account? ›
Primary account holders are legally responsible for the account. Primary account holders can name others as "authorized users" on the account, but they remain responsible for it. Joint account holders share responsibility for that account and both are considered primary account holders.
What happens if you have a joint bank account and split up? ›
If you and your ex are still on speaking terms, ask them to close the account together and split the funds. If they agree, take the money and immediately open a new account in your name only. If you are not on speaking terms, speak with a divorce attorney. Ask if it is legal to withdraw half the money in the account.
Is it illegal to transfer money from a joint account? ›
If you have a joint bank account with someone, can you take money out without their permission? Each account owner can get a debit card, write checks and make purchases. Both account holders can also add funds or withdraw them from the account. The money in joint accounts belongs to both owners.
Is it stealing if I take money from my husband? ›
Hi. I have been practicing law for over 35 years. I am a former prosecutor. All theft is criminal, gerardless of who steals from whom, including spouses.
