Money 101  >  Explainers

How joint accounts work

POSTED ON February 10, 2020

Joint bank accounts give two or more people access to a single account. These can be very convenient and useful for tracking, especially if the money is used for bills payment. These two people must have some form of relationship to each other, like being married, siblings or friends.  

Joint accounts can be used for savings, checking or time deposits, and come in two types. The first is the “And” type, which requires the signature of all depositors when money is taken out. The second type is the “Or,” in which any of the depositors is allowed to withdraw funds.  

Because the depositors in a joint account are considered its co-owners, each person’s share of the funds is equal. All benefits and charges related to the joint account are equally divided as well.  

Taxes and insurance 

To keep you safe, there are regulations that cover taxes and deposit insurance for joint accounts   

The National Internal Revenue Code (Title III, Chapter 1, Section 97) requires that all depositors are still alive any time a withdrawal is made. All bank withdrawal slips need to have a statement to that effect, and this statement is made under oath by the depositors. 

If one depositor passes away, his/her share is assumed to be equal to those of the other depositors. That means that any withdrawal from the account is subject to estate proceedings (legal actions meant to properly administrate, distribute or settle an estate when someone dies). This includes the payment of the estate tax. 

When a co-owner of a joint account passes away, the bank which holds the account will not allow any withdrawal until the Bureau of Internal Revenue chief (Commissioner of Internal Revenue) certifies that all taxes have been paid. If authorized by the Commissioner, the administrator of the estate or any one of the heirs of the deceased can withdraw up to P20,000 without this certification. 

Further, the guidelines of the government-owned Philippine Deposit Insurance Corporation mean that the insurance coverage (up to the maximum of P500,000) will be equally divided among all co-owners of a joint account. The only exception is if there is a different share split specified in the deposit documents.  

Making things easy via shared access 

Joint accounts are convenient and useful, especially when they are used to pay bills or save money. This is especially true for married couples because it allows them to easilcombine their funds for monthly expenses or a future goal. 

If you’re looking for a trackable and secured way for two or more people to keep their money togethera joint bank account might be the right one for you.