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What Is Joint?
Joint is a legal term describing a financial transaction or agreement where two or more parties act in unison.
Key Takeaways
- Joint refers to transactions or agreements involving two or more parties.
- Joint can also refer to liability, such as when two people share a debt.
- Joint is used in many situations ranging from joint accounts to joint ventures.
How Joint Works
Joint can pertain to accounts or ownership in real property such as joint-owned property. This is property owned by two or more people, who may be business partners, spouses, family members, or friends. If land, a home, or a business is owned jointly, each participating party shares in both the risks and rewards.
Joint can also refer to liability. Joint liability exists in situations where two or more people share the burden of a debt. For example, if a husband and wife have joint liability for a tax debt, each is responsible for the entire amount of the debt. There may be ways to request relief from tax, interest, and penalty liabilities resulting from a joint tax return. Consult with a tax attorney or other certified professional for details.
Types of Joint Arrangements
Joint, as a term, can be applied to a wide variety of financial situations, including the following.
Joint Accounts
The FDIC estimates that up to one-third of bank deposit accounts are joint accounts. With joint accounts, two or more parties share a single account. The law and financial institutions typically consider both parties to be equal owners, regardless of who started the account or contributed more money.
Joint accounts may benefit from more than the typical $250,000 insurance from the FDIC, as each co-owner of a joint account is insured up to $250,000. If two people are qualified co-owners on a joint account, the account's contents could be insured for up to $500,000.
Co-owners can spend or transfer funds to other accounts without the consent of the other account holder. Most joint accounts have rights of survivorship, which means that if one account holder dies, the other will automatically retain rights to the account funds.
Joint Tenancy
Joint tenancy refers to when two or more parties share equal shares of ownership in property with the same deed at the same time. This type of holding title is most common between spouses and among family members because rights of survivorship are involved, similar to joint accounts.
Joint tenancy differs from a tenancy in common. With tenancy in common, tenants may have different shares of ownership that could be obtained at different times.
Joint Annuities
Joint and survivor annuities are insurance products that continue regular payments as long as one of the annuitants is alive. A joint and survivor annuity must have two or more annuitants. Married couples may choose a joint annuity to guarantee that, in the case of death, the surviving spouse receives regular income for life.
Joint Ventures
In a joint venture, two unaffiliated companies contribute financial and physical assets and personnel to a new company. Although joint ventures are generally considered partnerships, they can take on any legal structure.
Joint ventures can help qualifying businesses (typically in a mentor-protégé relationship) compete for set-aside government contracts reserved for small businesses.
Corporations, partnerships, limited liability companies (LLCs), and other business entities can all be involved in joint ventures. Joint venture agreements take into account the number of parties involved, the joint venture's operation scope, the terms of each party’s role and contribution, the ownership split, and how the joint ventures will be administered, managed, and staffed.
Frequently Asked Questions (FAQs)
What Is a Joint Home Equity Loan?
A joint home equity loan is a home equity loan with two co-borrowers. The co-borrowers can be spouses or a homeowner and a trusted loan co-signer without interest in the property. A lender cannot treat married and unmarried co-borrowers differently.
What Is a Joint Applicant?
A joint applicant is someone who agrees to apply for a loan, credit card, or other financial product with you. The joint applicant's credit history and score will likely be considered alongside your own, which can help or hurt your application. Young adults under age 21 without income may need to find a joint applicant to apply for a credit card if the card issuer allows co-signers.
Is a Joint Loan a Good Idea?
If you help someone get a loan or credit card as a joint account holder, be careful. You're legally agreeing to pay back the loan or any amount borrowed. Even if you and the other account holder are no longer on speaking terms in the future, the loan or credit card will appear on your credit reports, and you will be responsible for the debt. Any delinquent debt from a joint loan or card could lower your credit score, and a debt collection agency may seek to recover the debt. If the terms of your loan are unclear, seek legal advice from an attorney.
The Bottom Line
Joint financial undertakings require two or more parties to accept ongoing responsibility for risks and rewards. A joint bank account could provide both parties with funds for paying rent, for example, but it also leaves you legally responsible for fees, even if your joint account owner's behavior led to penalties. Carefully consider the financial and legal implications of entering into a joint contract with another person, and speak with an attorney to ensure you understand potential risks.