MagnifyMoney 
If you share everything with someone in your life already, you might be curious how 2 people can invest in stocks together, along with other assets to build wealth.
The answer is a joint investment account, also known as a joint brokerage account.
These special investment accounts give both account holders benefits that help you pursue your shared financial goals. However, it’s important to understand the different types of joint accounts and how joint ownership works before you start investing.
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, exchange-traded funds (ETFs) and mutual funds; property (such as vehicles); or real estate.
Combined ownership of the assets in joint accounts is called joint tenancy. But not all joint tenancy agreements are created equal.
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 tenancy with rights of survivorship (JTWROS) gives each party equal ownership interest in the assets in the account. Married couples often choose this type of joint brokerage 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:
Joint tenants in common (JTIC) 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. A joint investment account with a spouse can complicate as many things as it simplifies.
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.
Melissa PhippsMelissa Phipps is author of The Retirement Rescue Plan and is a contributor to MagnifyMoney.com.
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