Two people who share a bank account are said to be joint. Couples can manage their finances more easily because both members have full access to the account and can make deposits and withdrawals as needed. Therefore, it is a wise financial decision and a relatively painless process to close a joint bank account when it is no longer necessary. You can end your joint account without difficulty if you know when and how.
Justifications for Closing a Joint Bank Account
If a co-owner of a shared account is unresponsive or uncooperative, or if you no longer need the account, it makes sense to terminate it (your banking needs to be changed or the relationship ended, for example). It may be tempting to keep an account open and cease using it in these situations, but closing your joint account as soon as you can protect you in several ways:Avoid Penalties
A joint bank account can be closed to stop one of the owners from using it carelessly and paying overdrafts and other fees. If you close the account, the co-owner might try to make withdrawals more significant than the available funds. The account balance will go negative if the bank settles the transaction on your behalf, and you risk being charged an overdraft fee. To close the account, you must reduce the balance to zero.Reduce costs
When you close a joint bank account, you also say goodbye to monthly maintenance and inactivity fees. You won't end up paying for something you won't use in this manner.Limit Your Legal Liability
Joint account holders technically own the money in the account equally, even if you're the only one using it and you trust the other person. Creditors may be able to seize your funds if another account holder is sued due to unpaid debts or an auto accident, for instance.Clean-up Your Act
You may want to put the past behind you if a relationship ends. An old joint bank account can be closed to relieve stress and eliminate unwanted reminders.Restrict Shared Full Access
Joint accounts generally permit each account to transfer funds or close the account. Both owners may gain financial independence from one another by closing a joint account. As a result, one person can use the funds in an account without getting permission from others. That's practical for families with busy schedules and business partners who want to work together effectively, but things can become challenging when partnerships break up.Tip:
Consider the possible reactions of other account holders before making a withdrawal or closing a transaction.Methods for Closing Joint Bank Accounts
Your bank will determine how to close an account. While some banks demand the agreement of both account holders before adding or removing a person from a joint account, most banks permit any account holder to close a joint account on their own. However, some only allow you to close using less convenient methods; you can choose the appropriate strategy by reading your account agreement. The terms of your bank account agreement will detail how to send instructions to request a closure. May use one of several methods to close a joint bank account:Online
You can close a joint account online with some banks automatically or by sending a message to customer service while logged into your account. Depending on the bank, both account holders may need to log in separately to request the closure.Phone
You might be able to speak with a customer service agent over the phone and close your account verbally.In-person
The most onerous requirement is that one of the account owners must physically go to a branch and sign for the closure of the joint bank account. If so, bring identification and give yourself plenty of time to finish the procedure.Note:
A joint bank account can typically be closed by just one person, who can be either co-owner.How to Close a Joint Account Step by Step
There may be repercussions if the account is terminated. If things go wrong, you might miss payments, have checks bounce, and shell out extra money in fees. Use this checklist when switching banks to prevent expensive surprises:Reduce the balance on your account to 0
Put money in the account to cover any shortfall, or specify how you want your bank to handle any remaining funds after the account is closed. In general, banks can wire money, mail checks, or you can make the money transfer yourself.Terminate Withdrawals
Ensure all outstanding checks have cleared to avoid costly overdrafts, holdups, and account closure delays. To avoid errors when closing your joint bank account, destroy any debit cards and associated checks. Likewise, stop any automatic payments for bills. To ensure you don't forget anything, research the previous 12 months of activity.Prepare your new account.
If you don't already have one, create one. The new account must allow you to receive payments, make purchases, pay bills, and keep cash on hand. Please don't rush to close the old account until you've given the new account time to receive your payments successfully; it could take up to a month.Request that your bank closes the prior account.
Find the specifications, such as who can ask for the closure and how to submit a request. After that, submit your request to close the joint account by bringing your ID and any required paperwork.Legal Trouble Avoidance
Anyone can empty an account without the consent of the other account owners because each account owner typically has full access to the funds in a joint bank account. That may result in two major issues:The money you take might not be legally yours.
Even though your bank gives you the go-ahead to take the money out and close the account, this might still be the case. A divorce decree might state, for instance, that money belongs to an ex-spouse.The co-owner could drain your account without your knowledge.
Consult a local attorney to discuss your options for protection if you don't trust the joint account holder. Your legal expenses can be significantly decreased by effective communication. If possible, talk about how to divide the money from a joint account to avoid things getting worse.Frequently Asked Questions (FAQs)
I want to take my name out of a joint bank account
To avoid sharing liability for any overdrafts incurred while you were a joint account owner, remember that removing your name from a joint bank account won't help. You won't be able to avoid bearing responsibility for upcoming obligations by removing your name from the account. You can ask the bank for a form to renounce your account ownership.On a joint bank account, who is responsible for paying income tax?
Owners of joint bank accounts are jointly liable for any income taxes incurred by the accounts. For married couples who file joint tax returns, this is simple. Should distribute the income tax burden following each person's ownership stake in the account for business partners or other individuals who share bank accounts without filing joint tax returns.