Understanding Joint Accounts
Joint accounts can be very useful where the finances of two (or more) people are closely linked, but it is essential that the account holders know exactly what their rights and responsibilities are. This BankFact deals with some of the most frequently-asked questions.
What is a joint account?
An account which is opened in the names of more than one person.
Why should I need a joint account?
It can sometimes be convenient for more than one person to be able to sign cheques alone to pay, for instance, household bills. An example of this would be where one of the joint account holders is away from home for extended periods of time. In this case you would need to instruct your bank to accept the signature of any one account holder alone.
It can also be useful to ensure that funds are only paid from the account provided both or all account holders have signed the instructions to the bank. In this case you would need to tell your bank that it could only accept instructions to pay money away (including cheques) if all the account holders have signed.
Often, people find it easier to budget by making regular transfers from their own personal account(s) to a separate joint account which can then be used to pay household bills.
Do all the joint account holders have to sign cheques?
Signing arrangements are at the choice of the account holders. Options range from any of the holders to sign alone up to all joint holders to sign every instruction to the bank.
How does the bank know how many people are to sign on the account?
The bank will ask for your instructions at the time you open the account. Each account holder will be asked to sign a joint account mandate which will tell the bank how you wish to operate the account.
Will I be responsible for cheques signed by my partner on the joint account?
Yes, provided the cheques are signed in accordance with the joint account mandate.
What happens if my partner and I split up?
You should both go to your bank to arrange for the joint account to be closed and new accounts opened in your sole names. The bank will also need to know how you would wish them to handle any existing regular payments such as standing orders or direct debits.
If my partner leaves me, stops paying into the account but continues to write out cheques, will I still be responsible for these?
If the cheques are supported by a cheque guarantee card, the bank will be obliged to pay them. In these circumstances you should contact the bank immediately to arrange for the account to be split. Until you tell the bank to cancel the joint account mandate, you will continue to be liable for the cheques and any resulting overdraft.
If I choose the option for "either to sign" on the joint account and then change my mind, what can I do?
Any joint account holder can cancel the joint account mandate. This will mean that the bank will need the signatures of all the account holders before it can pay any further items from the account.
What happens if one of the joint account holders dies?
The balance will automatically pass to the remaining joint account holder(s).
Does the balance belong to the joint account holders in equal shares for example 50/50 between husband and wife?
No. Any balance on the account belongs to the account holders jointly.
If one of the account holders overdraws the account, is (s)he solely responsible for the overdraft?
Each individual is fully liable for the whole of any overdrawn balance.
If my partner leaves me without trace and with an overdrawn account, will I be responsible for repaying the debt?
Yes. Each joint account holder is responsible individually for repaying any debt.
Will all joint account holders have to call in to the branch personally to open an account?
With a normal branch based account, the answer generally is yes. With a postal or telephone based account, the account would be opened through the post.
I wish to open a joint account with my elderly mother. Can I do this?
Yes, subject to normal banking criteria.
My partner is an undischarged bankrupt. Can we open a joint account?
An undischarged bankrupt cannot open any sort of account without the permission of the Official Receiver.
My partner has been refused a bank account due to a bad credit record. Can we open a joint account?
This would be a commercial decision for the individual bank.
Will all parties to a joint account need to produce a driving licence or passport as identification before the bank will open an account?
The form of identification will depend on the bank concerned, but the bank will need to be satisfied that the identities of all the account holders are genuine.
If my joint account is overdrawn, can the bank transfer money from my personal account to clear it?
As a general rule, yes.
If my personal account is overdrawn, can the bank transfer money from our joint account to clear it?
Check the terms and conditions on the account but as a general rule, no.