As much as financial institutions have grabbed a hold of technology, with all sorts of bells and whistles, when it comes to joint bank accounts, in many cases, old fashioned programs and policies are in place. It's time to play catch up.
What needs fixing? Plenty.
Money coach Lisa Chastain of Chastain Consulting has five wishes when it comes to joint accounts, “1. You can see who is spending and on WHAT easily. 2. You don't have to be Sherlock Holmes to understand each of the person's spending patterns and behaviors. 3. You can readily know what you're spending on groceries and gas each month by person. 4. You don't have to spend 10 hours categorizing your purchases in order to make sense of them in a graph. 5. Transactions are separated by debit card user.”
Good luck with that. However, there’s buzz about the online bank Simple and its joint account, Simple Shared, which it is planning to roll out this year. It does much to address the shortcomings of joint accounts. Simple Shared accounts do away with that 1950s notion of a shared account being the domain of only married couples. Reflecting the reality of today, two people with an account could be best friends, roommates, anybody, not just spouses. This is clearly a more modern Millie. One “mission” of the product is to create a way to share and manage money that enhances relationships. Transparency isn’t an issue. Each of you can see who spends how much on what and when, be it payments, transfers and check deposits. Even the Shared Simple Visa Debit Card has a design that serves as a visual metaphor for partnership.
A few years ago, researchers from Smart Design posed as a long-time couple and went shopping for a joint account. They found the process “revealing” and had some suggestions for what banks could do to improve the joint-account sign up experience for couples. For one thing, they wanted a more attractive ATM card. They thought the cards were impersonal and they wanted something “that was the equivalent of wedding bands”. The cards didn’t even have their names on them. They also wanted a welcome message that reflected that they were a couple. For example, “Looks like you just opened an account with George Stafford!”. Good luck with that! Secondly, they fathomed what good could come out of what they called an OKCupid-type questionnaire that has the couple exchange habits and hang-ups. No doubt, as the researchers pointed out, it would be an opportunity for couples to talk about money without drama. Another brilliant idea the researchers posed, is the notion of banks hosting an onboarding period that gives couples access to resources like financial planners and money tips. Researchers were also gung ho about banks offering rewards for maintaining a joint account.
Beyond that, attorney Jonathan Burns with Bone McAllester Norton, says the one area he sees need of improvement is uniformity between banks on rules for survivorship of a joint account with owners who are non-spouses. “With spouses, a joint account is presumed to have rights of survivorship. However, with non-spouses, the policies and procedures of the bank determine the rules for survivorship upon the death of a joint owner. Therefore, unbeknownst to account owners, who ends up with the funds upon an owners’ death can vary depending upon which bank holds the account,” says Burns.
As an estate planning attorney, he has seen instances where things did not go according to plan with joint bank accounts owned by non-spouses.
“My advice would be to simply do your due diligence and make sure you clearly designate in the account opening documents how the funds are to be handled at the death of an account owner. Otherwise, for an account owned by non-spouses, the policies and procedures of the bank will control, which certainly can vary from bank to bank,” he says.