How To Open a Joint Checking Account

One of the first things a newly married couple decides is whether to open a joint checking account.  For some couples, this is a no-brainer decision.  Some do it and some would never do it.  But there are quite a few who aren’t sure whether they should.  Here are a few things to think about.

When you open a checking account, you have to provide your social security number.  The bank will then report to the IRS any interest earned during the year.  If you are going to open a joint checking account, the social security number of the first person listed on the account is the number the bank will file the report under.  For many people, this doesn’t really matter.  They are going to file a joint return.  All the interest will be claimed equally by both partners in a joint return.  For a few people, this may be an issue. 

A bigger concern, often voiced by the person who balances the checkbook, is how to keep track of the spending.  It can be very frustrating to think you have everything covered only to find out your partner already spent some of that same money on something else and forgot to tell you.  This is why quite a few couples choose to keep separate checking accounts.  They will often split the bills in such a way as to make sure all the bills are getting paid each month, and each person has a little bit of spending money to spend or save.  Whatever extra is in their account is theirs to use as they see fit.  Some couples will have a third account to pay all the bills from, but extras are paid out of the individual’s accounts. 

There is another way used by plenty of people.  Two joint accounts, one with one partner’s name first, the other with the other partner’s name first.  That way it is easy to know whose account is whose.  But why even bother?

Most people want their assets to go to their spouse if they should die.  And there are plenty of ways to get this done.  But probably the easiest way for many assets to transfer is to use a JTWROS account.  JTWROS stands for Joint Tenants with Rights of Survivorship.  That means if one person dies, the other person(s) on the account has full and immediate access to all funds.  Nothing else has to be done right away.  Other types of accounts may require that you provide a death certificate and do some paperwork prior to actually having access to the account.  That can take days and sometimes weeks.  If you are a recent widow or widower, especially one with kids, that can take valuable time.  Sometimes that is time you don’t have, as you’re trying to pay the bills and deal with the trauma.  A JTWROS or joint account can bypass all that additional aggravation and allow you to deal with that at a later date when it’s more convenient for you. 

You will have to decide what the biggest issues are for you.  There really isn’t a right or wrong way.  It’s just the way that’s best for you.


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