Let's talk about joint checking accounts and the benefits and risks they carry. We can use an unmarried couple, Jack and Jill, to provide example scenarios.
First off, what is a joint checking account? A joint checking accountis similar to a regular checking account, but can be accessed by more than one person. This means that there are two or more names to the account, so that both parties can legally withdraw, deposit, or close the account on their whim. They are often shared amongst couples, parents with their kids, or adults assisting their elderly. Although they are convenient for drawing money from a common source, it comes at a risk, depending on the state of your relationship.
There are clear benefits of opening up a join checking account. For example, a couple can open one up to share expenses. Each month, Jack and Jill can set up their payroll so that a portion of their paycheck is automatically placed into their joint checking account. From here, their rent, bills, household expenses and other types of bills are automatically processed. This saves the time from having to perform calculations and transfers manually.
Another way Jack and Jill can use Joint Checking Accounts is if they plan on saving for something big. Let's say they plan out a trip to Costa Rica in late summer. Jack and Jill can then both place a piece of their salaries into this account to ensure they are both on top of saving for their trip. This will also hold each other accountable to make sure they are both contributing equally to the trip.
Of course, such accounts can come with problems when things in a relationship go sour. Since Jack and Jill both have complete access to the account, Jack can wipe out the entire account whenever he'd like. This is 100% legal, and Jill won't be able to do anything about it.
In another case, Jill might tragically pass away. In this case, the entire account goes directly to Jack. So even if Jill had family that she would have liked the money to go to, Jack would still be legally entitled to it all.
Before you and a loved open an account, make sure you sit down and discuss your needs and whether a Joint Checking Account is for you. Ensure that you are both clear as to what goes in, and what each withdrawal should go towards. Also, it's almost never a great idea to dump large sums of money in the account at a time, unless the both of you are very trusting of each other.
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