What is the difference between owner and co-owner of a bank account?

The holder of a bank account is the person who owns the funds that are deposited in said account, or the debtor in the case of requesting a loan. But, what is the difference between the owner and the co-owner of a bank account?

In this post, we are going to tell you what three essential figures in the banking field consist of and how they differ: the owner, the co-owner and the authorized person of a bank account.

What does it mean to be the holder of a bank account?

The owner is the person, natural or legal, who has full rights and powers over the bank account that he opens in his name, and who must sign the contract that regulates it. In the case of loan operations, the account holder would be the debtor.

Well, how many holders can a bank account have? An account can have one or more owners, which can be set both at the time of opening it and later.

The co-owner of an account

The co-owner of a bank account has the same rights and obligations as a holder, but his responsibility may vary depending on the degree of co-ownership of the contract.

In this way, we can differentiate three types of ownership:

  • Indistinct or solidarity: it is a modality that includes people who can carry out movements in the bank account with total freedom. It is common especially among holders who have a relationship of trust. For example, a parent and child who share ownership of an account, even though the second does not contribute the funds.
  • Joint or joint : in this type of ownership, each of the owners needs the approval of the rest to make any type of decision. It is the most used in the professional area to allow the partners of a company, for example, to face certain payments.
  • Subordinated: in this modality, different levels are established in the decision-making capacity of the account holders. In this case, holders with a higher degree do not need authorization to carry out operations. The rest of the holders do need it. On the other hand, in the event of the death of one of the owners, only the funds belonging to the deceased will be frozen until the will is made.

What is the difference between owner and co-owner?

As we have told you, the owner is the person who signs the contract and owns the rights to the bank account. A co-owner shares ownership of the funds in such account with the owner or other co-owners.

The main difference between owner and co-owner of a bank account is that a co-owner can be included later (it does not necessarily have to be at the time of signing the contract), and an owner must be the one who signs the contract at the time. In addition, being a co-owner does not imply having the same funds as the other owners (a co-owner may not even be the owner of any fund), so co-ownership is not established in equal parts.

In other words, the fact of sharing a current account means that, in front of the bank, everyone can dispose of the money that is in it. But the ownership of the funds depends on the origin and the relationship that the co-holders have with each other.

In this way, opening a shared bank account does not mean that we have to pay taxes on funds that do not belong to us.

What is the difference between holder and authorized in a bank account?

Now that we know what an account owner and co-owner are and how they differ, we are going to explain what it is to be the authorized person of a bank account and what is the difference between the owner and the authorized person.

An authorized person is the person who can use the money in the account on behalf of the owner, but with certain limitations.

Therefore, the main difference between owner and authorized in a bank account is that the owner (or co-owner) is the owner of the funds and can make decisions. On the other hand, the authorized person has a signature to operate in the account (with the authorization of the owner) but without being the owner of it. In other words, he can make deposits, transfers or sign checks, for example, but he cannot apply for credit cards or cancel accounts.

In this way, capital yields are attributed only to the holder, and if he dies, the person who has been legally authorized cannot dispose of the money deposited in the bank account. In other words, he loses all rights to the account and will not be able to carry out any further transactions.

Therefore, from the moment the owner dies, the money that belongs to him is paralyzed until the will is carried out. If several holders act on the account, only the part that corresponds to the deceased will be blocked. In addition, the authorized of a bank account also has no legal responsibility for debts and tax obligations.

The rights of the authorized

The rights that the authorized person of a bank account has depend on what is stated in the authorization letter in question. In the event that the authorization is of a general nature, the authorized person will be able to dispose of the account on behalf of the owner.
The main actions that the authorized person can develop are the following:

  • Have the balance of the account (make payments and general movements of the balance).
  • Make a request for information, without having to have the consent of the owner.

On the contrary, the authorized person can neither change the conditions of the contract nor request the blocking of the bank account. It is also important to keep in mind that those authorized in a bank account can be included later than its opening.

Likewise, it is interesting to remember that this figure is common when the owner of an account is a company, and other people are needed -employees- who may be authorized to manage it.

Now that you know the difference between owner, co -owner and authorized of a bank account, do not hesitate to consult if you have any questions. We read you!