Joint Account Question - Need Help

Discussion in 'Professional Trading' started by Flashboy, Jul 10, 2003.

  1. I've asked about a joint account before here but now need some advice.

    I opened a joint account with a friend.. we would each put up $1,000..

    I funded the entire $2,000.. he still hasn't put in.. but says that he plans to.. now its not that I don't trust the guy.. He's my best friend and we've helped each other out financially many times in the past.. I know he won't screw me over.

    My problem.. is he's having financial problems.. to the point where he may claim bankruptcy or have a creditor or two garnish or levy something..

    The account is set up under both our names and social security no.'s..

    What should I do.. Get him off the account until he comes up with the money..

    Can creditors seize this account and actually collect 100% of the money thats in it for what he owes them??

    Thanks for any help.

  2. why are you messing around with this guy for 1000. not worth the hassle. get his name away from your assets.
  3. If registered as "tennants in common", each owns 50% independently. If "tennants by the entirety", it's like being married... a claim against one is the same as a claim against both. The registration should have included which "type" of joint ownership was intended.

    BTW, ANY kind of joint tennacy other than with a family member is just asking for trouble and ill advised.
  4. gms


    A joint account, by law, means that 100% of that account is his, and the same 100% is yours. Doesn't matter who funded it. That account is 100% completely subject to his creditors. Get the money out now - today - and close the account. You never ever for any reason open a joint account with anyone unless they are your spouse. Not parents, not kids, not siblings, and certainly not others. There are better arrangements than joint accounts to do whatever it is you want to do. And, if I may offer a bit more advice, never trust that things will go as promised, even from the best of friends. It's better to have a written agreement, just to keep all parties disciplined. But even then, when the lines are crossed, it's a turmoil. Better to not ever even get involved.
  5. Okay so how do I handle this.

    I will tell him I'm taking his name off the account for what reasons.

    I think I'll tell him that either one of us could get screwed.. that if something happened to me his assets could be loss.. that way I don't make it sound like I don't trust him..

    When/if he's ready to give me the $1,000.. I will have more than $1,000 in the account.. how should I handle the account for both of us.. with say me owning 65% of the account and he owning 35%..

    Do yall know the best way legally to set that up with?

  6. Ebo


    I would not want this in any way associated with me if I were you. Who cares about $1000?
    If you keep the account open, your other assets could become vulnerable.
  7. it looks to me like if both names are on the account either can close it. so whoever closes the account first gets the money. just close it and tell him later.
  8. the bigger problem with closing it is that the check will be made out excatly as it appears on the acount...meaning , he gets 50%...also, any and all assets where his name appears can be frozen.....
  9. gms


    I take it you have reasons not to close the account and open your own. In that case, assuming you can easily take him off the account, then do that. Either way you go, you have a reason to give your friend: The account was opened prematurely, before your friend could fund it. Plus, the type of account ownership, "joint", was inappropriate and subjected both of you to unwanted possible entanglements. This is the truth. Now, if he's a friend, he certainly wouldn't want that for you as well as for himself, so there is no possible valid objection he can make.

    For example, say you get killed in a car accident tomorrow. Your portion of that joint account will get inherited by your friend. No matter what you've specified in your will if you have one, that money goes to the other joint owner. Not your wife, not your kids, not to your favorite niece and nephew for their college, not even to your favorite charity, or buried with you. All of it goes to your friend.

    Why would a friend object?

    Insofar as how to go about opening the account when and if he funds his portion: start from that point in time with an even keel. You fund $1000, so does he. Write a simple partnership agreement on paper and have both of you sign it. You can find a simple such agreements online and in the library. Do not choose joint ownership with the account, but rather, as someone else suggested, "tenants-in-common" to avoid the issues of joint tenancy. You don't want to start at an even keel at that time? You can get "investment club" software very cheaply that handles the task of apportioning different percentages/amounts of partner's investments and keeping track of it.

    You may have to get that software eventually anyway. For example, let's say you both started with equal amounts invested, but one day, your friend says he needs to get at some of his money and makes a withdrawal. Now you're not 50/50 anymore.
  10. "You can get "investment club" software very cheaply that handles the task of apportioning different percentages/amounts of partner's investments and keeping track of it."

    One more quick question about this..

    How do I legally set up an account that would handle an investment club.. this type of account would probably be best in case I want to add family and others.. lets hope it does that well anyway..

    thanks for the help.
    #10     Jul 10, 2003