Managing Joint Accounts Successfully

The Basics of Managing Joint Accounts

Successfully managing joint accounts involves understanding and utilizing the accounts well. A joint investment account is characterized by the number of owners on the account: two or more. This type of account allows the owners (typically life partners) to pool their assets together in a single account. 

With joint accounts, all account owners can manage investments within the account, access account information, and be held liable for any fees or penalties. Account owners are required to provide identifying information and signatures before the account can be opened. 

Getting on the Same Page

The key to successfully managing a joint account is ensuring all owners are on the same page. One of the first steps towards this goal is discussing considerations like risk tolerance, time horizon, and goals for the account. This ensures that both parties are working towards a common goal while remaining comfortable with the investments within the account. 

Related reading: How Can Couples with Different Investing Goals Meet in the Middle?

Once the account is opened, account owners should regularly discuss pertinent information like investment decisions, account returns, fees, or concerns that might come up. It’s important to remember that each individual’s goals could change over time, and adjustments to the account might be in order. Open and regular communication helps both parties shift expectations and accommodate accordingly.

Finally, account owners should regularly receive and review account statements and transaction confirmations to ensure the account is invested according to their wishes. Keeping accurate and detailed records is another way to ensure transparent communication. Thankfully, the wide availability of online statements makes this even simpler for account holders.

Planning for the Future With Joint Accounts

Managing a joint account starts with choosing the best type of account for your situation. The type of account will dictate what occurs when an account owner passes away or is removed from the account. There are three main types of joint accounts: tenancy in common (TIC), joint tenants with rights of survivorship (JTWROS), and tenancy by the entirety (TBE). 

In a tenancy in common account, each account owner holds a specific percentage of the assets in the account and can either sell or transfer their ownership as they wish. This type of account is best for those who value control over their share of the account. 

In a joint tenants with rights of survivorship account, each account owner holds an equal share of the account. In the event of an owner’s death, the deceased’s share is automatically transferred to the surviving owners. This account is best for those who wish to easily transfer assets to another owner upon their death. 

Tenancy by the entirety accounts are designed for married couples. In these types of accounts, ownership of the account transfers in full to the surviving spouse automatically upon the death of a spouse. TBE accounts can provide protection from lawsuits and creditors in certain states. 

In the end, joint accounts can be a powerful tool to build wealth and reach financial goals. The key to managing them successfully is understanding the options available and using open communication to ensure all parties are content with the arrangement.

Sources:

B2B Prime: What Is a Joint Brokerage Account, and How Do You Manage It?

Investopedia: Joint Brokerage Accounts