Difference Between Joint Account and Beneficiary Account

When everyone hears "account", they will think of a carrier that is set according to the accounting subject, has a certain format and structure, and is used to reflect the increase or decrease of accounting elements and their results. But what we see more often should be bank accounts and software accounts.

So what I want to talk to you about today is The difference between a joint account and a beneficiary account, let's take a look.

A joint account refers to a personal current settlement account or a lump-sum and lump-sum fixed deposit account that is jointly opened by two or more (less than five) individual customers, the deposit is not restricted, and the withdrawal must be handled in the agreed manner. 

Features:
  1. Joint management: through joint account opening, to meet the needs of customers to jointly manage funds;
  2. Joint use: to achieve reasonable control of account funds through agreed withdrawal methods;
  3. Joint accumulation: after agreeing on the common method of account funds, to realize the sharing of account funds.
Banking services have changed recently. So people no longer shy away from putting their savings in the bank for later use. The banking industry also provides options for different bank accounts, through which customers can access tailored products and services.

For example, the availability of joint accounts enables multiple parties to pool funds into one account and agree on how to use said funds. Beneficiary accounts also grant designated beneficiaries access to funds from these accounts. This article further describes joint and beneficiary accounts.


What is a joint account?

A joint account means an account whereby two or more owners access the account. They are usually owned by husband and wife, relatives, or business partners. This type of account requires trust because the designated person has access to the funds in the account.

However, each account has rules on how to access assets or funds or what to do with the account after the death of the co-holder. Transactions requiring the signature of all members are also the norm. All members also share responsibility for any fees or charges involved.

A joint account between two parties is titled "and" or "or" between the account holder's names, so an account titled "and" must be signed by all parties. Accounts titled "OR" only require one party's signature. Joint accounts can be temporary or permanent.

Despite the benefits associated with joint accounts, they can present some challenges, such as providing unlimited access to funds to all parties and fees that may apply. The government can also confiscate owed taxes, child support, and other seized funds.

What is a beneficiary account?

These accounts have a designated beneficiary of funds if the primary account holder dies. Beneficiary accounts, which are often overlooked, are crucial because they not only provide security for personal assets but also prevent probate, while also providing tax benefits to beneficiaries.

There are two types of beneficiary accounts;

Pay-On-Death (POD) - This is an ordinary account that transfers named beneficiary rights to the account upon the death of the account owner. It just involves filling out a form indicating the details of the beneficiary.

However, while the primary owner is alive, the beneficiary has no rights in the account. This gives the primary owner the flexibility to change beneficiaries.

Transfer on Death (TOD) - Similar to POD, this allows individuals to designate beneficiaries of bonds, stocks, and mutual funds that can only be accessed after the primary account owner dies.


What are the benefits of a joint account?

There are many reasons for opening a joint account, such as a couple setting up a joint account to pay for daily expenses, and this is the most common situation.

In some cases, a joint account can be a way that some people get help from family or friends, such as paying bills and managing money. For example, it is difficult for people with health problems or limited mobility to manage their personal banking on their own. If this is the case, it is advisable to have a joint account and have a third party manage your banking for you. It could be a child or a legal wife, etc.


What are the risks of a joint account?

Unless you specify in the bank's account opening contract, anyone in the joint account can withdraw money from the account at will.

Funds taken may never be recovered!!

Either party can withdraw money at will:

If your relationship with your joint account holder breaks down, you risk your money being taken away or not being handled the way you want. If the joint account holder and the spouse separate or divorce, the property in the account can also be divided.

The withdrawing party has little responsibility for:

It can be difficult to prove that one party is responsible for any arbitrary withdrawal of money from an account. You may have to go to court to sue the other party, which can be costly and can take a long time to resolve.

It is easy to cause legal disputes:

Usually, joint accounts have the right of survivorship, which means that if one of the account holders dies, the surviving account holder becomes the account holder and has the right to deal with the funds in the account.

However, if there is no way to tell whether the money in the account is a gift to a living person or part of the estate of the deceased account holder, there is another person who claims to inherit the property in the joint account. One needs to prove that the deceased intended to give the remaining funds to him as a gift.

Account funds can be used to repay debts:

All account holders are responsible for all transactions made on that account. If one of the joint owners has financial problems or declares bankruptcy, creditors can demand compensation from the money in the joint account.

Removing account holders is not easy:

Banks may require written signatures from both parties to remove one of them from the account.


What are the features of a joint account?

A joint account refers to a personal current settlement account in local and foreign currencies or a lump-sum deposit and lump-sum fixed deposit that is jointly opened by two or more (five or less) individual customers, the deposit is not restricted, and the withdrawal must be handled in accordance with the agreed method. account.

Co-management: By opening accounts jointly, customers can meet the needs of co-management of funds.

Common use: Realize reasonable control of account funds through agreed withdrawal methods.

Co-accumulation: After agreeing on the sharing method of account funds, realize the sharing of account funds.

1. Features of the joint account

The nature of account ownership

The most fundamental feature of a personal joint account is that the personal joint account is the common property of the joint account holder in terms of ownership, while the traditional personal account is only the personal private property of the account holder.

The difference in the nature of account ownership determines that joint accounts must take into account the interests of all account holders, and can only be opened and used when all account holders agree with each other. Joint accounts are only opened for nationalized enterprises.

  1. Account opening: In order to reflect the unanimous intention of the joint account holders, the joint account must be opened with the identification documents of all the joint account holders and signed and sealed by all holders. The traditional personal account can be opened only with the account holder's own identification document.
  2. Use of the account: Traditional personal accounts only need the account holder's signature and seal to withdraw funds and transfer and settle accounts in the account. Individual joint accounts are subject to signature terms when used. The so-called signature clause refers to the terms of the joint account holder's signature and seals authority that the depositors of the joint account have jointly signed and confirmed when opening the joint account. As a financial intermediary, the bank manages the joint account in strict accordance with the signature and seal authority determined by the signature clause.

2. Matters needing attention
  • A joint account is jointly opened by two or more (less than five) individual clients.
  • Deposits and withdrawals from joint accounts must be processed in the agreed manner.
  • A joint account is a personal current settlement account or a lump-sum and lump-sum fixed deposit account.

3. How to open a joint account?
  1. Applicants for joint accounts need to provide the identity documents of all account holders. If applicants for joint accounts have opened a local Elite Club account, they need to go to the counter of a business outlet to go through the application procedures for opening a joint account.
  2. Applicants for joint accounts need to fill in the Application Form for Individual Joint Accounts, agree on the relevant business methods, and sign the Personal Joint Account Management Agreement.
  3. A joint account refers to the joint account opened by two or more individual customers, the deposit is not restricted, and the withdrawal must be handled in accordance with the agreed method. account.
  4. Joint management: To meet the needs of customers to jointly manage funds by jointly opening accounts; Joint use: To achieve reasonable control of account funds and funds through agreed withdrawal methods.
  5. Co-accumulation: After agreeing on the common method of account funds, the sharing of account funds can be realized; for example, husband and wife, brothers and sisters, and small business owners in the form of partnership are all suitable for handling joint accounts.


Similarities Between Joint Accounts and Beneficiary Accounts

  • Both prevent probate in case of death of the primary account holder and named beneficiary


The Difference Between a Joint Account and a Beneficiary Account


  • Definition
A joint account is an account where two or more owners have access to the account.

On the other hand, a beneficiary account is one that has a named beneficiary in the event of the death of the primary account holder.

  • Get funding
While funds in a joint account require a member's signature depending on the account type, funds in a beneficiary account can only be used by the beneficiary after the primary account holder dies.


Summary of Joint and Beneficiary Accounts

A joint account is an account where two or more owners have access to the account. Therefore, a member's signature is required to use the funds.

On the other hand, a beneficiary account is one that has a named beneficiary in the event of the death of the primary account holder. The designated beneficiary can access the funds only after the primary account holder dies.

However, both prevent probate in the event of the death of the primary account holder and a named beneficiary.

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