Joint brokerage accounts, of which there are several types, are shared by two or more people. There are some advantages to opening a joint brokerage account with your spouse, a relative or a business partner. There are also some potential disadvantages, including financial ones. If you’re considering opening up a joint brokerage account, make sure you do your research beforehand, as there are many options on the market.
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What Is a Joint Brokerage Account?
Brokerage accounts allow investors to buy and sell a variety of financial investments, including stocks, bonds, mutual funds and ETFs. Joint brokerage accounts are shared by two or more people looking to pool investments. This can also make investment management easier and simplify estate planning.
If you and another party or parties want to open a brokerage account together, you can do so as a non-retirement account. Traditional retirement accounts like 401(k)s and individual retirement accounts (IRAs) do not allow joint ownership of brokerage accounts.
Joint brokerage accounts are usually used by spouses, relatives, partners and business associates. However, a joint brokerage account be opened between any two adults who share mutual financial goals.
Types of Joint Brokerage Accounts
There are several types of joint ownership, each with specific nuances. If you’re planning on opening a joint brokerage account, it can help to review these three common types of ownership so you can open one that fits your particular circumstances:
- Joint tenants with rights of survivorship. This type of joint brokerage account has the provision that if one owner dies, the other gets the money in the account in its entirety. During both owners’ lifetimes, they both have full ownership of the assets in the account.
- Tenants by entirety. This type of account is used mostly by married owners who hold joint property. For one spouse to make changes to the account, they must have consent from the other spouse. When one spouse dies, the other spouse gets the account in its entirety.
- Tenancy in Common. Both account holders have complete control of the account, but they each own a pro-rata share of the assets. When one account holder dies, their estate determines what to do what their pro-rata share. The other account holder keeps their share of the account.
It’s important to make the correct selection for your circumstances when you set up your joint brokerage account. Otherwise, problems could arise in the case of divorce or death.
Pros of Joint Brokerage Accounts
A joint brokerage account can be accessed by any of the parties at any time, which can be a major upside. Trades can be made, balances checked and funds deposited. Access is particularly important if one of the account holders dies, since the other one can continue using the funds without having to wait for probate, which could take a year or longer.
A joint brokerage account can also simplify estate planning. With joint tenancy, with rights of survivorship or tenancy by entirety, the surviving account holder will automatically receive the proceeds of the account if one account holder dies. This significantly simplifies estate planning and may allow the surviving account holder to skip probate. This holds true no matter what the deceased person’s will says.
Finally, joint brokerage accounts allow the pooling of resources. This allows both account holders to take advantage of lower fees and transactions costs, as well as the power of compounding of interest. This can be helpful for all parties involved.
Cons of Joint Brokerage Accounts
Joint brokerage accounts don’t allow the designation of beneficiaries. If the joint owners were to die at the same time, the account could be put in probate. Probate sorts out how the money should be distributed, but the process could take a year or even longer.
Joint brokerages are also at greater risk from creditors. If one of the owners of a joint brokerage account encounters trouble with debts and creditors, the joint account could be seized if the creditors come after the assets of one of the individuals. That puts the other individual in financial jeopardy.
If you own a joint brokerage account with someone other than your spouse, any deposits you make into the joint account could be considered a gift to the other account holder, which could trigger gift tax liabilities. Depending on the laws in your state, the gift tax could be triggered when you deposit the money, or when you withdraw it. It might be a good idea to check with an attorney or your tax accountant if you find yourself in this situation.
On top of it all, joint brokerage accounts require a certain degree of trust . If you own a joint account with your spouse and there is a divorce, or if you have a falling out with the other account holder, then you run the risk of one party selling off assets. This could be devastating to family or business relationships.
Tax Implications
Joint brokerage accounts also come with a few important tax implications, which vary based on ownership type, income and gains from investments. Here’s a rundown of the implications, so you can get an idea of how they may impact your financial situation:
- Income and Gains: Any income earned from investments (dividends, interest or capital gains) is taxable. Joint account holders must divide this income based on their ownership share. If ownership is split 50/50, then each person reports half the income on their tax returns.
- Gift Tax: If one person contributes significantly more than the other to the joint account, the IRS may treat this as a gift, potentially triggering gift tax implications. For 2025, the annual gift tax exclusion is $19,000 per person, meaning contributions over this amount could require filing a gift tax return.
- Estate Tax: For Joint tenants with rights of survivorship accounts, when one account holder dies, the value of the account is included in the decedent’s estate. However, if the surviving account holder can prove their contribution, only the decedent’s portion is included for estate tax purposes.
It can also be a good idea to consult with a tax professional to fully understand how a joint brokerage account can affect your specific tax situation.
Bottom Line
Weigh your options carefully before opening an joint brokerage account. If you have any trust issues with a family member or a business partner, there are other ways to be sure the heir of your choice has access to your money if you were to die. For example, durable powers of attorney or trusts. If one account holder contributes more to the joint brokerage account than the other, there may be a source of conflict. Another source of conflict could reside in the trust each has for the other.
Tips for Investing
- Investing is often easier when you’re working with a financial professional like a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area. You can have free introductory calls with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Estate planning and planning for your financial future can be complicated. SmartAsset has you covered with tons of free online resources. For inheritance laws by state and other great estate planning tips, look at SmartAsset’s Estate Planning Guide.
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