How to Make a Joint Account: Steps and Requirements

A joint account is a financial arrangement shared by two or more individuals, granting each owner equal access to and responsibility for the funds. It simplifies shared financial management for purposes like household expenses or common goals. Joint accounts can apply to various financial products, including checking, savings, and some investment accounts.

Choosing the Right Joint Account Ownership Structure

Selecting the appropriate ownership structure is a foundational decision when establishing a joint account, as it dictates how funds are accessed and distributed, particularly upon the death of an account holder. Two common structures are Joint Tenancy with Right of Survivorship (JTWROS) and Tenancy in Common (TIC). JTWROS ensures that if one account holder passes away, their share of the account automatically transfers to the surviving account holder(s) without needing to go through probate.

In contrast, Tenancy in Common (TIC) allows multiple individuals to own a share of an account, but it does not include the right of survivorship. If a tenant in common dies, their portion of the account does not automatically transfer to the surviving co-owners; instead, it becomes part of their estate and is distributed according to their will or applicable probate laws. TIC arrangements offer flexibility, as owners can hold unequal percentages of the account and designate their share to an heir. Another less common type is a “Convenience Account,” which appears similar to a joint account but designates only one person as the true owner of the funds. The additional person on a convenience account is authorized to transact on behalf of the owner but does not hold ownership rights, and upon the owner’s death, the funds typically revert to the owner’s estate.

Preparing to Open Your Joint Account

Before initiating the account opening process, all prospective account holders must gather specific personal information and identification documents. Each individual will need to provide their full legal name, current residential address, Social Security Number (SSN) or Taxpayer Identification Number (TIN), date of birth, and contact information such as a phone number. This information is essential for financial institutions to verify identities and comply with regulatory requirements like the Know Your Customer (KYC) guidelines.

For identification purposes, commonly accepted documents include a valid government-issued photo ID, such as a driver’s license, state identification card, or passport. Proof of address is also typically required, which can be provided through a recent utility bill, lease agreement, or other official document showing the current residential address. Some financial institutions may also require an initial deposit to activate the account, which can range from a nominal amount like $25 to $100 depending on the bank’s policies.

Steps to Open a Joint Account

Once all necessary information and documents are prepared, opening a joint account can be accomplished through several methods. Many financial institutions offer online applications, allowing applicants to complete forms and upload scanned identification documents. The process typically involves digital signatures and submission through the bank’s secure portal, with confirmation often sent via email. Some online processes may also require verification steps, such as linking an external bank account for initial funding.

For individuals preferring a direct approach, opening an account in person at a bank branch is an option. All account holders are generally required to be present, bringing their identification and required information to meet with a banking representative. During this meeting, applicants will sign documents, present IDs for verification, and make the initial deposit. Alternatively, some banks facilitate mail-in applications, where forms are completed, signed, and mailed along with copies of required documents. After submission, there may be a short waiting period for approval, and the bank will provide instructions for initial funding and account access.

Understanding Joint Account Operations and Responsibilities

After a joint account is established, all account holders have shared access and control, meaning any owner can independently make deposits, withdrawals, or conduct transactions. This shared access extends to debit cards and online banking credentials. However, this convenience also comes with shared liability for the account. All account holders are jointly and severally responsible for any financial obligations, such as overdrafts, fees, or debts incurred, even if only one individual caused the issue.

In the event of an account holder’s death, the operational impact on the account depends on the initial ownership structure chosen. For accounts with Joint Tenancy with Right of Survivorship, the surviving owner(s) automatically gain full ownership of the account, bypassing the probate process. Conversely, for Tenancy in Common accounts, the deceased’s share is typically transferred to their estate.

Changes to the account, such as adding or removing an account holder or updating personal details, usually require the consent of all existing account holders and adherence to the financial institution’s specific procedures. Interest income generated from a joint account is taxable income for all owners. While the financial institution may issue a Form 1099-INT to the primary account holder, all account holders are responsible for reporting their proportionate share of the interest income on their individual tax returns.