There are many people who set up bank accounts not simply with their spouses, but with grandparents, parents, siblings, children and friends. Often times these bank accounts are set up as joint bank accounts as a matter of convenience.
For instance, a joint checking or savings account may be set up with another person in the event one or both of the people become incapacitated so that the other person on the account can continue to pay the bills for the incapacitated person. In other cases a joint account may be set up in the event of a person's death so that the other person has immediate access to the funds in the account to pay for funeral expenses or even to simply have ownership of the funds without having to go to probate court or to fight with other family members.
Another likely instance is that you open an account for your child but make sure your name is on the account so you can make sure you can oversee the account and make sure your child is making deposits to the account.
The point is, that in many instances, the secondary person on the account is not there because they are truly the owner of the funds (though the law often sees it that way) but rather, as a matter of legal convenience to assist the person who is the true owner of the account or protect against the inability to pay bills for the person I refer to as the "the true owner" of the funds in the account if something happens to them.
In possible divorce situations it is important to know several things about bank accounts where one party is put on the account as a matter of convenience and as a result these three tips may come in handy for these "Convenience Accounts."
Joint checking or savings accounts where one person is intended to be the actual owner of the funds and the other person is on the account as a "mere convenience" in the event where the owner of the funds should be set up carefully since under Rhode Island law at the time of this writing, any joint account that is not specifically set up carefully carries with it the rebuttable presumption that both parties own all of the monies in the account in their entirety and either person on the acccount may, in fact, withdraw the entirety of the monies without the permission of the other party (at least as far as the financial institution is concerned) at any time.
As you might imagine, in a divorce case where one party's name is on the bank account account it is all too easy for one of the spouses to "take the money and run" or to include the money of perhaps a grandparent who has a joint account with your spouse into the marital estate such that it could possibly be frozen by the family court as assets of your spouse because your spouse's name is on the account. Then, it may be a matter of proving that the joint account was one set up as a matter of convenience for the true depositor and true owner of the funds in the account.
So how do you protect yourself regarding these accounts where a party is put on the account as a "matter of convenience" or "just in case something happens" type of scenario. This, by the way is particularly helpful in possible divorce situations in the family.
Consider these three (3) when you set up these accounts or even after you set up these accounts to protect your funds.
1. When you set up any joint account with someone else on the account not because they truly are intended to own the monies but "as a matter of convenience", in the very least you should have the financial institution make formal notations in their computer file at the time you open the account that YOU as the owner of the funds are the primary account holder have set up this account as a matter of convenience so that that your mother, brother, sister, friend or whoever you choose is on the account purely as a matter of convenience. The more you can spell out about what that convenience is for, the better it is for you. You can specify physical incapacity, medically declared incapacity by a physician or in the event of death that the funds shall revert to the person on the account (or that the funds shall be subject to your Last Will and Testament). Keep in mind that your financial institution may or may not follow these directives to the letter since they may not check notes on your file on the computer or in a paper file each and every time a transaction is made. However, making these notes at the time you set up your account may be a great protection to you if a divorce occurs with you or one the person(s) noted on your account "as a matter of convenience. Using these words when you set up the account establishes from the outset what your intention is.
2. If you didn't establish your joint account as a matter of convenience as I outlined in paragraph 1 above, then you can always do it later on if you realize there may be an issue or perhaps even at the time you read this article as a "just in case" measure. It is better to do it than not do to it. Just as the old saying goes, it is better late than never. I highly recommend providing to your bank a notarized letter signed by you under oath that outlines that the person on the account is to be considered secondary and is on the account as a matter of convenience. You may even want to spell out what those instances of convenience are. Make sure your financial institution places this letter in your file and notes it on your account. It goes without saying that you should keep a copy of this letter.
However, it may do little or no good at all if you do all of this after something devastating has occurred such as the filing of a divorce with a person who is on your account as a matter of convenience.
3. On an account that is set up as a matter of convenience and the funds are actually yours, do not let the person who is on the account as a matter of convenience deposit money into the account, or let them withdraw money from the account and especially do not let the person write checks from the account, unless those are some of the things that are part of the "convenience" you spell out expressly to your bank on your account. Allowing these things to happen shows equal access to the funds and may signify that they were not intended to be on the accounts as a matter of convenience, but rather that the funds are truly equally theirs as the law presumes. If you let the person do this, when you are capable of doing it yourself without difficulty, then you may not be able to support your contention that the monies in the account are truly yours and the court may not believe that you are on the account as a matter of convenience. In which case, if you are the owner/depositor of those funds, you may risk losing them.
Equitable distribution of assets is one of the primary things that the RI Family Court divides and when emotions often run high in divorces it is best that you anticipate what could happen with people you put on your bank account, regardless of what they may say or do. Remember, it is not a lack of trust on your part to protect your funds. One study mentioned that now 6 out of every 10 couples end up in divorce. Therefore the odds are in favor of a divorce happening to a person who you may consider putting on your bank account as a matter of convenience.
Taking these actions by putting in writing your express wishes and intentions with your bank, credit union or other financial institution where you have an account that you have another person on as a matter of convenience may be the best and other evidence you have to rebut the presumption that you intended by opening the account that the monies in your account were entirely for both you and the person you have on the account with you.
Protective actions may protect you against the person on your account, the spouse of the person on your account or perhaps just the court itself. These days it is not a matter of trust to legally protect your financial future, rather it is an imperative to insure that you retain what is yours.