Joint Accounts: What You Need to Know 

How can I have a joint account, but still know my money is safe?  This is the thought many of us have pondered, as we are asked whether or not we wish to add someone to our account, by our respective financial advisor.  We have heard the stories where people have regretted this decision, because their trust was abused.  

As a matter of fact, although this incident happened more than ten (10) years ago, it still feels like yesterday. Vanessa called me, devastated that her fiancé, Mark, cancelled their wedding.  She needed to be with her mom and thus called me to request a cheque to pay for her airline ticket.  However, when I quickly opened her account I froze in utter shock. She had given Mark equal rights to the account and he exercised his ‘right’ by cleaning out all that she had been investing towards her dream home.  “If she had only listened to the options I was giving her, when she elatedly added him to the account,” I thought.  

Protecting Your Money
Pooling your money may imply love and/or trust, however it is important to appreciate the consequences of the signing instructions you choose for your account/s.  Remember it tells your financial institution the circumstances under which a joint account holder is authorised to do transactions.   It is also critical to have separate accounts, for different purposes/goals and the corresponding signing rights.  Here are some guidelines in determining the signing rights for your joint account:
•    Anyone to sign instructions: This allows anyone listed on the account the right to request a transaction, without the permission of the other joint account holder/s.  This may be great for your transactional and/or emergency funds, since the balances tend to be smaller.
•    All to sign: In this case, for a transaction to be done all the persons must agree and sign.  This is most appropriate where both persons are making equal investments towards a joint financial goal.
•    In case of death or incapacitation:  Funds can only be accessed if valid proof of your death or medical documents are presented, indicating that you are not in a position to make financial decisions. This is great for an account to which you are the only contributor.

Using my friend’s scenario as a guide, see below for the consequences of exercising varying signing rights: 

Assuming only Vanessa and Mark were on the account	Any-one-to-Sign	All to Sign	In Case of Death
Would Mark have had equal rights to the money?	Yes	Yes	No
Could Mark do a transaction without her knowledge?	Yes	No	No
If valid proof of Vanessa’s death or incapacitation was presented to the financial institution, could Mark gain access without needing Vanessa’s last will and testament to be probated or her signature.	Yes	Yes	Yes
If Vanessa wanted to “test the waters” before giving up complete control, what signing instructions could be appropriate?	No	Yes	Yes
If she wanted to have complete autonomy over large sums of her money and/or inheritance while she is alive?	No	No	Yes

What is the most appropriate signing rights for each of your accounts? Your choice should be based on the financial goal/ purpose of the funds, amount of money and proportion of the contribution to the account; instead of your existing relationship.  If you are in need of further guidance, simply ask your JMMB financial partner.  

Written by: Michelle Sinclair-Doyley

                    Manager, client financial education, JMMB Group