Are Joint Bank Accounts Protected from Lawsuits?

A joint bank account is not automatically protected from a creditor of one owner. A creditor who wins a judgment can garnish a joint account, and the bank will usually freeze the whole balance first.

Whether money is ultimately released or protected depends on state law, how the account is titled, whose money it is, and whether any funds are legally exempt.

How a creditor reaches a joint account

After a creditor gets a judgment, they can serve a garnishment on the bank. Banks respond by freezing the account up to the judgment amount.

The freeze can cover all funds in a joint account even if the co-owner does not owe the debt. The co-owner then must act quickly to claim any protection or exemptions.

If only one owner owes the debt

Courts often presume each owner can withdraw all funds in a joint account. That presumption makes the entire balance vulnerable unless the non-debtor owner proves what portion is truly theirs or that the account has a special legal status.

Without proof, judges may allow the creditor to take more than the debtor’s “share.”

Married couples and tenancy by the entirety (TBE)

In many states, including Florida, married couples can hold a bank account as “tenancy by the entirety.”

Entireties ownership treats the couple as a single legal unit. A creditor of only one spouse cannot take entireties funds. But a creditor with a joint debt of both spouses can.

Federal claims (like some tax liens) can follow different rules. Entireties protection depends on exact state law and correct account titling, so the account should be opened and labeled as TBE, not merely “joint.”

To qualify as a TBE account under Florida law, six conditions must be met with the bank account:

• The owners must be married.
• Both spouses must have identical ownership interests in the account.
• They must have acquired the account together at the same time.
• Both names must appear on the account.
• The account must be for their joint benefit.
• The account agreement must not exclude tenancy by the entirety ownership.

Joint accounts with a parent, child, or roommate

Adding a non-spouse to an account rarely adds protection and often increases risk. If your co-owner is sued, your money can be frozen while you fight to prove what is yours.

Convenience and estate-planning goals (like helping a parent pay bills) are better handled with alternatives such as a power of attorney or a payable-on-death (POD) designation rather than true joint ownership.

Exempt income and tracing

Certain deposits can be exempt from ordinary creditors under federal or state law. Common examples include Social Security, some disability benefits, veterans’ benefits, and certain retirement funds.

Exempt status is stronger when funds are deposited directly into a separate account rather than mixed with other funds. Mixing exempt and non-exempt funds can make tracing more difficult and weaken the claim of exemption.

What happens during a garnishment

When a bank receives a garnishment, it freezes funds and notifies the parties. There is a short deadline to file a claim of exemption or to contest the garnishment.

Courts may set a hearing. Bring statements, deposit records, and proof of exempt income or account titling. If the account is properly titled as entireties property and only one spouse is the debtor, you ask the court to release the funds.

If the account is not entireties, you may still argue for the non-debtor’s share.

About the Author

Gideon Alper is a nationally recognized expert in asset protection planning. He has been quoted by major media publications as a leading authority in Florida asset protection and offshore trust formation. Gideon graduated with honors from Emory University Law School and has been practicing law for over 15 years.

Gideon and the Alper Law firm have advised thousands of clients about how to protect their assets from creditors.