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The latest Q & A on a compliance issue, as provided by the League's General Counsel at Norman, Hanson & DeTroy.
Question: When a member opens a share draft account, we consider that member the “primary” on the account. When that member adds a second person as a joint owner, we still consider the member as the primary, which means that we only allow the primary to add any other joint owners or to take any joint owner off the account. Is this practice correct?
Answer: No (unless your account agreement specifically contains these terms, which is unlikely). Once a joint owner is added to the account, both parties are owners of the account. Consequently, there is no “primary” and secondary owners; but rather, both parties should be treated the same. This is true despite the fact that the second joint owner may not be a member of the credit union. The Probate Code, and your account agreement, provides that each party may access any or all of the funds regardless of which one made deposits into it. Accordingly, once a second owner is added to an account, the credit union should not allow changes to the account, such as the addition of another joint owner, designation of P.O.D.s, or removal of an owner, unless both owners agree to such changes.
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