Trusting A Family Member with Your Bank Account
Managing your finances is not a one-person job. With many circumstances involving money – bills, checks, dues, and even daily spending – a trustworthy helping hand is always welcome.
This makes co-ownership of a bank account convenient for those willing to have an equal share and transaction rights over their money. Find out what options are available to choose the best setup for a shared account that would not cross boundaries you are uncomfortable with.
Can You Add A Family Member to Your Bank Account?
The simple answer is yes, you can. Most banks have special account types which accommodate more than one owner. These include:
A joint bank account entails having two individuals with equal rights and ownership over one account. This grants them full access to funds in the account, allowing them to withdraw from, deposit to, and write affiliated checks. The partner account holders could be:
- Parents and their adult child
- Business partners
- Any two persons who have mutual trust for one another
A convenience account maintains only one account owner but allows that individual to designate another to do the following on the owner’s behalf:
- Write a check
These individuals can be a friend or family members. Nevertheless, that assigned trustee does not get any claim to the money in the account upon the owner’s death. This kind of account is not widely known, and you may have to inquire if the bank actually offers such a type.
How to Add Another Individual to Your Bank Account
The steps to add a family member to your account can vary depending on the bank’s requirements. It usually requires the additional party to go to the bank personally and present documents such as:
- Proof of identity
- Proof of address
- Social Security Number
The rest of the process will resemble opening an individual bank account. Sometimes, a Power of Attorney might be needed, especially when the account owner cannot go to the bank personally.
Power of Attorney
A Power of Attorney or POA is a document that states a name that the account owner can delegate. When the person stated in the file brings a copy of the POA, they could complete bank transactions in the latter’s place.
Account owners who opt for this can choose between having a Limited or Durable POA.
- Limited POA: Allows another person to sign checks on the owner’s behalf but does not allow them to claim account ownership.
- Durable POA: An account holder can withdraw funds from the account and close it without the other’s permission.
Frequently Asked Questions
What are the tax implications of adding someone to your bank account?
A joint account would be convenient for married couples who file only one tax return, as all they need to file for is the interest on the account. However, the rules will vary depending on the bank and your state.
How to transfer money from a joint account to an individual account?
Money from a joint account can be transferred via online and mobile banking. Moving the money by manually withdrawing it or using a third-party application such as Paypal is also possible.
The process of adding a family member to your bank account is not as complicated as you think. It is similar to opening an individual savings account, but you might need to submit additional documents. It’s highly recommended to ask your bank how to do it and what type of account qualifies for more than two owners.