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Recently, my wife and I are looking at ETFs and hope we could invest some. While we were opening accounts, there are two options, one is individual and the other one is joint account.

We thought joint account may be a good idea since one of us can take all the money if there would be some accidents to the other one. However, tax is also a concern for us, any pros and cons if we open the account jointly?

Thank you.

  • Are you not filing joint tax returns now? – quid Jun 15 '17 at 22:53
  • Sorry, we are young couple just filed our first tax returns two months ago, we filed joint tax return, so the invest income is the same as normal income? – lilixiaocc Jun 15 '17 at 22:59
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    I'm sure someone will offer a more complete answer but unless you are still filing separate tax returns and specifically seeking to keep assets separated I'd just open a joint account. – quid Jun 15 '17 at 23:02
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    Is this a taxable account? Is this an IRA? – mhoran_psprep Jun 18 '17 at 3:28
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type of account doesn't matter for tax purposes. If you are 'married, filing jointly", it doesn't matter whether the money comes from an individual account or a joint account.

Furthermore, in states having community property (Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin), all assets acquired during the marriage are considered "community property", so it matters not whether the account is individual or joint.

The only place it really matters is with an IRA, the I = individual. Even this can get a little muddied if one spouse has a much bigger IRA than another.

Logistically and legally, it's cleaner book-keeping and easier to have a joint account.

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When it comes to having a joint vs individual account, the difference is in control of the account.

If you and your wife want to both have access to the funds whenever you want (you'll each usually have your own login for online accounts) then the joint account lets you do that. You could also do the same thing with your best friend or a stranger. Just remember that this means AT ANY TIME any one of you could make deposits, withdrawals, buy/sell stocks & funds, etc. without approval from the other person. This applies even if you are fighting, getting a divorce, separated, or someone dies. So make sure you really trust whomever your joint account-holder is 100% before you do this. This also means the account survives if one person doesn't.

With an individual account, only the individual has control over the account...all of the deposits, withdrawals, buy/sell stocks & funds, etc. are up to that one person and that one person alone. With individual accounts you can usually set up one more more beneficiaries, which are people who will get the disbursements of the accounts in the case of your death or incapacity. But they would not be able to have any access to it at all until that time. There are two ways that your wife will have access to those funds if something were to happen to you: 1) You make her a 100% beneficiary to the account, or 2) you die and never declared a beneficiary (in almost all countries and states).

So the question you have to ask yourself is how much you trust each other? You also have to ask who will be doing the investing. If you do all the investing and she doesn't have any inclination to touch it, you may just consider an individual account and be sure to make her the beneficiary. Having a joint account won't give you any tax benefits or anything else. It's all about who controls the account. That is all. The downside to this is that if you were to die as an individual account holder, the account is usually closed and disbursed to your beneficiaries. If you want the account to remain and keep growing after you are gone, then a joint account may be more suitable. It will survive you and your wife would still have control of it.

(NOTE: If you decide to go the individual route be sure to let her see that she's the beneficiary as well as the statements every once in a while so she knows what's going on. You don't want to be the husband who makes his wife think that he's hiding money to keep from her and then she goes off and opens her own individual account, stashing money as she counts down the days until she can run off with her loot. Sometimes they do this right before they kill their husband. Hey, it's happened.)

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