For couples: separate or combined accounts in retirement

[BBQ-Nut]

Up until now my DW and I have had separate accounts for savings, checking and after tax investments. And, obviously, we have different tax deferred accounts with our respective employers.

We've taken a very pragmatic approach of his and her money and we settle up the bills at the end of the month.

For us....it has worked well.

In retirement however, I was thinking that it may be more pragmatic and easier on both of us as we get older to 'downsize' to single joint checking and savings and combined brokerage accounts.

Was wondering how other couples here in retirement approach the separate vs joint 'paradigm'.

 

[REWahoo]

If what you have is working for you, I'd keep it.

 

[Walt34]

One of the issues to consider is that if one gets seriously sick and needs to go on Medicaid is that the entirety of amounts in joint accounts are subject to the "five-year lookback". If the accounts have been separate for longer they are not considered part of the assets for that person.

So if what you've been doing works for you then that is one reason not to change it.

 

[seraphim]

Retirement - tax deferred - accounts are separate by necessary. Everything else joint. In case of one of us passing, avoids having some funds frozen in an account. The other can just transfer the funds to a different account. Might save in any estate taxes as well.

 

[seraphim]

"One of the issues to consider is that if one gets seriously sick and needs to go on Medicaid is that the entirety of amounts in joint accounts are subject to the "five-year lookback". If the accounts have been separate for longer they are not considered part of the assets for that person."

Walt, I've had a attorney who specializes in senior services advise that accounts don't have to be joint for the government to get its reimbursement. Might depend on the type of account. Might be something to check...

 

[Dash man]

We do some of both. The majority of our taxable accounts are in either a joint asset management account or joint CD accounts. We do each maintain some taxable funds in separate checking and savings accounts to allow some privacy in personal spending. All of our community bills are paid for out of our asset management account. If we buy gifts or help out our respective families, it usually comes out of our individual account. It works well for us.

 

[Dreamer]

Everything is in joint accounts, except for the tax deferred. We have done it this way for 41 years.

 

[rodi]

One of the issues to consider is that if one gets seriously sick and needs to go on Medicaid is that the entirety of amounts in joint accounts are subject to the "five-year lookback". If the accounts have been separate for longer they are not considered part of the assets for that person.

So if what you've been doing works for you then that is one reason not to change it.

I don't think the titling of the account makes a difference in medicaid look back. I had to research this for my inlaws when my FIL was going into a home.
Retirement accounts (IRAs, 401ks) are titled separately, but considered as assets in the medicaid spend down - even if they're in the community spouse's name., Pretty much ALL assets are considered and handles as jointly owned, regardless of titles on the accounts or deeds. Then the spend down and community spouse rules are applied.
Spouses of Medicaid Long-Term Care Recipients
http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Downloads/Spousal-Impoverishment-2014.pdf

 

[pb4uski]

If what you have is working for you, I'd keep it.

+1 though that is not what we do.

 

[walkinwood]

If what you have is working for you, I'd keep it.

+1, but we have joint accounts where possible. We merged them a few years after getting married.

 

[gerntz]

Up until now my DW and I have had separate accounts for savings, checking and after tax investments. And, obviously, we have different tax deferred accounts with our respective employers.

We've taken a very pragmatic approach of his and her money and we settle up the bills at the end of the month.

For us....it has worked well.

In retirement however, I was thinking that it may be more pragmatic and easier on both of us as we get older to 'downsize' to single joint checking and savings and combined brokerage accounts.

Was wondering how other couples here in retirement approach the separate vs joint 'paradigm'.

With joint, you wouldn't have the work of settling up bills at the end of the month. Perhaps it's a bonding experience, but to me seems a hassle. Of course this is coming from someone who's accounts have always been joint.

The other thought is joint allows the other person to deal with all finances in the event one is disabled from doing so. Don't know who's managing your brokerage accounts, but if not you it would allow whomever is to do AA clearly for the both of you.

 

[38Chevy454]

Everything is in joint accounts, except for the tax deferred. We have done it this way for 41 years.

Same for me and wife, but 21 years length of time. Plan to be this way for many more!

For OP, since you have been working it separate for long time, why change now?

 

[Live And Learn]

Same for me and wife, but 21 years length of time. Plan to be this way for many more!

For OP, since you have been working it separate for long time, why change now?

+1. Been married nearly 30 years and there was not enough money to worry about his/mine/ours at the time so all accounts (except 401ks) are combined. We each get the same "monthly allowance" for spending money (no questions asked on what the money was spent on). Everything else is joint.

If separate has worked for you why change ? Would you each be ok with getting "an allowance" - if not then it may be a little stressful, at least at first.

 

[SJ1_]

"One of the issues to consider is that if one gets seriously sick and needs to go on Medicaid is that the entirety of amounts in joint accounts are subject to the "five-year lookback". If the accounts have been separate for longer they are not considered part of the assets for that person."

Walt, I've had a attorney who specializes in senior services advise that accounts don't have to be joint for the government to get its reimbursement. Might depend on the type of account. Might be something to check...

or what State you are in, which could change ..

 

[MRG]

or what State you are in, which could change ..

+1 We saw that when our parents lived in an elder friendly state. Unfortunately to have children to care for them, they had to move. Where they moved that state's elder laws were very friendly too, friendly for the state.
MRG

 

[TimSF]

My DH and I did exactly what the OP is contemplating and it is working well. When we were both earning salaries it made sense to have separate bank accounts. Having a single checking account now from which we both pay expenses makes it easier to track how we are doing viz our budget.

 

[Walt34]

Walt, I've had a attorney who specializes in senior services advise that accounts don't have to be joint for the government to get its reimbursement. Might depend on the type of account. Might be something to check...

Apparently I was either misinformed or misunderstood what I was told, the latter being more likely....

From http://aspe.hhs.gov/daltcp/reports/spouses.htm:

Basic Medicaid income and asset eligibility rules for married couples:

1. All income and assets (his, hers and theirs) are combined, regardless of ownership, including things that are often the sole legal property of just one spouse -- for example, retirement savings accounts or pension checks.
2. If either spouse has an interest in property with a legal right to sell, claim or cash it out in some manner to obtain money for his or her personal use, then the fair market value of that property is counted to the extent of the spouse’s legal right to convert it to cash.
3. The rules for couples living apart differ from those for couples living together, as the income of a community spouse is not considered to be available to an institutionalized spouse. Medicaid rules encourage married couples to choose nursing home rather than in-home care for an ill spouse in order to preserve additional income and marital assets for use by the community spouse.[SIZE=-1]6[/SIZE]

 

[Alan]

We've had joint accounts for 38 years then in January this year we split the money into his and hers. The reason is that we'll be returning to the UK in a couple of years and the tax code does not account for marriage. Everyone files as individuals, so to minimize taxes it is better to split the income streams to maximize the zero and 20% tax bands and to double the cap gains 0% tax allowance to $34k.

After splitting the accounts to individual accounts we set up "Agent Authorizations" so that we each have full authority over each others' accounts.

 

[Rambler]

Joint accts since our wedding, nearly 30 years ago. Everything except the 401k and deferred comp, and a work related vested stock acct. She is the beneficiary on all of those.

 

[RetireAge50]

Same as Rambler except 25 years. Clean and simple.

 

[martyp]

We have been splitters all along and continue to be splitters. His, hers, and joint accounts settled monthly.

 

[Gazingus]

DW and I even share an email address....

 

[sengsational]

I have a few titled to me, but TOD to her. When I had a paycheck, a set amount went to her account (actually joint, but I don't use it). Now that there's no paycheck, I have a regular ACH transaction that covers stuff for which she has budget (groceries, gas, girl stuff). If I cash-in, she'd need to "break the glass" to log on to my billpay account, short term. But the regular transfer and mortgage should just keep going for a long time, even if nothing gets done.

 

[marinauser]

We have always kept two checking accounts with both names on each account. However, only one name is printed on the checks for each account and manage them hers and mine. However, in case of an emergency, either one of us could sign a check or withdraw money from either account. The investment account is where most bills get paid and that is a joint account. We have our own credit cards. I don't really see any reason to change after retirement.

 

[FIREd]

When we married, we did not have much. So everything was combined. Most of what we have today is still owned jointly except for retirement accounts (we are each other's beneficiary) and inheritances.