MagnifyMoney 
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It may not have not been reviewed, commissioned or otherwise endorsed by any of our network partners or the Investment company.
Like any other type of joint account, joint investment accounts allow you to invest with another person. While you don’t have to be married to commingle your investment activities, there are reasons to consider a joint investment account if you have a spouse.
You can use joint investment accounts to simplify household finances, manage an account on behalf of another or pool resources to make a purchase. There are two main types of joint investment accounts, and each comes with distinct benefits and drawbacks. Before you invest in a joint account, understand how joint ownership works and how it can impact your finances.
How much would you like to invest?
Joint investment accounts allow two or more people to invest together. You can invest in just about anything with a partner, including stocks, bonds and funds; property (such as vehicles); or real estate.
Combined ownership in financial assets is referred to as joint tenancy. There are two main types of joint tenant accounts: joint tenants with rights of survivorship and joint tenants in common. The main difference is how the shares are divided should one owner pass away. Each has benefits and drawbacks, depending on your needs.
| Type of joint account | Joint tenants with rights of survivorship | Joint tenants in common |
|---|---|---|
| Ownership | Each party has equal ownership | Parties may have different shares of ownership |
| What happens in case of owner’s death | Interest of deceased is automatically passed on to other surviving owners | Interest of deceased goes back to the estate or their beneficiary listed in their will |
| Probate treatment | Avoids probate | May be subject to probate |
Joint tenants with rights of survivorship (JTWROS) gives each party equal ownership interest in the overall account. Married couples often choose this type of joint brokerage or banking account because rights of survivorship mean the surviving owner has rights to the deceased’s share. Upon the death of one owner, the assets automatically transfer to the other. However, the JTWROS can be broken before that if one owner decides to leave.
Typically used by:
-Bryan P. Koepp, SVP Wealth Planning Executive, Regions Bank
Keep assets out of probate. Settling a deceased person’s last will through the probate process can be complicated and potentially drag on for months, making it difficult for the surviving spouse to access assets. Some couples strategically place assets in JTWROS to avoid probate. Like other accounts with named beneficiaries, these accounts automatically transfer ownership to the surviving spouse and are typically not included in probate.
-Bryan P. Koepp, SVP Wealth Planning Executive, Regions Bank
Surviving owner has control. In the case of one co-owner’s death, full ownership automatically goes to the surviving owner. The surviving party gains full control of the asset, regardless of any contrary instruction in a will or trust.
Joint tenants in common allows multiple people to share fractional ownership in a property instead of equal ownership. There are no automatic rights of survivorship with joint tenants in common. When one owner dies, their share of the investment automatically goes back to their estate, unless otherwise specified in a will.
Typically used by: Multiple real estate investors who want to share ownership in a single property, and keep the interest of each separate should one party pass away or leave the investment.
As you can tell from the above, the question of whether to open a joint investment account with someone is a complicated one.
A joint tenancy with a spouse is an easy way to share investments, avoid probate and keep the continuity of ownership should one spouse pass away. Joint tenancy ownership with others may make sense depending on the circumstances.
Before sharing ownership of anything, however, it helps to tread carefully and make sure you understand the risks.
The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.
