Opening a Joint Account
What is a joint account?
A joint account is a bank account opened in the names of two (or more) individuals. There are various reasons for opening a joint account. The most common is certainly to make it easier for a couple to manage their finances, especially when they need to pay shared expenses.
All of the individuals holding the joint account have the same rights when it comes to withdrawals, deposits and any other banking transactions allowed in the account. As a result, each accountholder can do transactions without first obtaining the other accountholder’s permission, unless the account has been specifically set up to require this consent.
Risks associated with joint accounts
- Since both accountholders own the joint account, each person can manage the account at his or her discretion without the consent of the other accountholder, including, for example, by withdrawing funds or even by closing the account. National Bank will accept the instructions of either accountholder because both of these individuals is authorised to act alone, even though the account is jointly held (unless otherwise indicated).
- The accountholders are jointly responsible for all of the instructions received by the Bank relating to the joint account and for the commitments made by each accountholder relative to the joint account.
- If the couple separates or divorces, the funds in the joint account may be considered marital property.
- If the bank receives a garnishing order (seizure by garnishment), the joint account could be frozen, or in some provinces garnished, preventing the accountholders from accessing the funds.
- The funds deposited in the account may be subject to the rights of the creditors of either accountholder (for example, in the case of bankruptcy or insolvency) and may also be subject to claims made against either of the accountholders.
Before opening a joint account…
Ask people you trust about the risks and advantages of a joint account
- Do you understand how a joint account works?
- Do you understand your obligations under a joint account?
- Since your account co-holder has the same rights as you with respect to the joint account, do you understand that he or she can use any of the funds in the account even if you deposited them?
Is your joint account co-holder trustworthy
- Has that person always been honest and upfront with you?
- Do you know the person well enough or have you known each other long enough to trust him or her?
- Is the person likely to act in your interest?
- Does the person have personal problems that could prevent him/her from managing your joint finances properly?
How much control will you have over the funds in the account?
- Have you asked your Bank if there are ways to retain some control over the transactions done in the account?
- Are you in a position to regularly check the account statements in order to check for any irregularities?
In the event of an accountholder’s death
What if something happens to one of the accountholders?
- If the joint account is held in Quebec, in the event of an accountholder’s death, access to the account will be blocked until an executor has been designated to manage the estate’s assets. In the meantime, withdrawals will only be possible in order to pay for urgent expenses and funeral costs. If the joint account is held in another province or territory outside of Quebec, then the account will be subject to a right of survivorship. This means that in the event of death of one accountholder, the surviving accountholder retains all of his or her rights relative to the use of the joint account, including any remaining balance.
- Ask your financial institution or legal advisor to explain what would happen to your joint account property if one of the accountholders dies or becomes legally incapacitated.
- Consider including information about your joint account in your will so that your wishes will be clear.
1 In Quebec, joint accounts are frozen if one of the accountholders dies.