November 28, 2021, 18:00

    Money Talk: ‘My partner wants to open a joint bank account – should I say yes?’

    Money Talk: ‘My partner wants to open a joint bank account – should I say yes?’

    Ah love. There’s really nothing like that rush of feelings when you fall for someone special.

    Yet when you chose to spend the rest of your lives together, you’re not just making an emotional commitment. There are huge financial implications too.

    As well as all the legal commitments that come from marriage and civil partnerships, many couples chose to combine their finances.

    This can be positive in many senses.

    Sharing incomes equally regardless of earnings is both symbolic and practical. It also means if one of you is more financially savvy than the other, you can keep an eye on your spending and savings more effectively.

    But things do go wrong with relationships and sometimes when they end, it can be hard to take back control of your cash.

    So it makes sense to know what the implications are for jointly held accounts, savings, investments and your home.

    What happens if the relationship turns sour?

    Getty Images)

    What is a joint bank account?

    A joint bank account – or a joint financial agreement – is any arrangement where more than one person is listed on the account or policy.

    These vary depending on the agreement (a credit card might have a primary and secondary card holder, for example).

    Joint accounts work in the same way as normal accounts, only there are two or more people who have access and control over them. It’s not just for couples though. Friends sharing houses might set up a joint account for their bills or just to save money collectively.

    How do they work?

    Most joint arrangements will require you to sign a mandate (a document instructing the financial firm what to do).

    This will specify if it is ‘both / two (or more) to sign, meaning both parties have to sign to do things like withdrawing cash, authorising payments and more, or ‘either to sign’ which allows you to operate individually with what you do with the account.

    The suspicious minded among you might be thinking that the latter option is rather risky, but realistically, for many people the ‘two to sign’ option can be frustrating for carrying out simple banking transactions, so they tend to go with ‘either to sign’ as it at least allows them to act independently while keeping an eye on what’s going on.

    So what’s the problem?

    Sometimes things go wrong. If you’re with a partner, you might split up and if things are frosty, this can lead to problems.

    Other times the person you’re in a joint account or arrangement with might be rubbish with money or be reckless and thoughtless. This means you can quickly rack up debts.

    It’s possible to extend an overdraft and max it out before the other person on the account even realises, for example.

    Have you experienced an issue with a joint bank account? Get in touch:

    In the worst-case scenarios I’ve seen, people have taken loans out against properties (using faked signatures which is illegal, but can be tricky to prove), cleared out their children’s savings accounts or applied for and maxed out credit cards or credit agreements.

    Now if someone has broken the law – and you haven’t agreed to a joint agreement like borrowing against the equity in your home – that’s not your fault and you can, of course, make a formal complaint about it.

    You’ll often need to report the criminal act though, which is hard for many people in difficult relationship situations.

    What if you have signed a joint agreement?

    This is the tricky bit. In UK law we have something known as ‘joint and several liability’.

    Leaving aside the literal legal definition, what this means in practice is if you enter into a joint contract with another person or people, then you are responsible for the entire agreement if one or more people fail to meet their obligations.

    In simple terms, if your partner maxes out your joint bank account overdraft and credit cards and vanishes, you are solely liable for paying off the debt if they can’t be tracked down.

    This has saddled people with huge debts over the years and is one of the biggest sources of financial stress and hardship that people encounter.

    What can you do if you’re in dispute with someone you have a joint account with?

    All is not lost if you fall out with someone you’re in a joint agreement with.

    If you call the bank or financial institution and tell them that there’s a problem, they are obliged to freeze the account straight away.

    Either party can do this. But bear in mind that you will not be able to unfreeze the account without the agreement of both parties.

    You can also approach the bank and ask them if you can change the mandate.

    You might want to dispose of or cancel any credit bearing things, like cheque books or credit cards.

    I’d also check back through your statements to see if there’s anything that you’ve not authorised.

    Word of warning

    Even if your relationship is going well, it makes sense to have a separate bank account in your name, even if there’s only £1 in it.

    This means you’ve always options if something does go wrong so you can get paid and pay your bills.

    Why do I feel so guilty?

    Making sure you’ve got some sensible measures in place for joint arrangements, knowing your rights and having your own bank account are all things every couple should talk about, do and accept, even in those glorious days of the honeymoon period.

    Being practical doesn’t mean being disloyal.

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