Joint v Separate Accounts?

[Sassy]

Just curious as to how everyone handles this and views it in their own households.

When we first started out as DINKs we had separate checking accounts, separate savings accounts, separate (obviously) retirement accounts, and a joint after-tax investment account, an account who's demise has been well-covered in my previous thread. I wanted the separate accounts, Mr.Sassy disagreed, thinking of it in terms of "ours". To him, separate indicates bigger problems and the plotting to split down the road. In my view, separate accounts means covering all bases, keeping some level of independence, and a safety cushion if, yes, I do need to split down the road. Sad to think that way, I know, but I'm in favor of watching my own rear, especially now. We kept those separate accounts for the first 10 years of our marriage until I stayed home with the kids, then moved to one joint checking and savings account with the others staying the same.

So, the discussion recently came up that I wanted to keep the joint checking (being a SAHM doesn't work for opening an individual checking account since they now have so many deposit/withdrawal requirements to meet to avoid bank fees), but open an after-tax account in just my name and put some money in that. We would still have a joint after-tax account and separate retirement accounts, but I would like a little extra under my name. Mr. Sassy then countered with wanting the same for him, his thinking is this is my chess move for eventually leaving him. However, he has his 401k and IRAs, not to mention the paycheck, and the disparity moneywise between what's in his name and mine is huge, even if I factor in the joint account. Fair enough that, yes, I'm positioning myself in case things go south again in the future, but I think it's reasonable considering I currently have zero income and little in just my name to begin with.

This conversation also carried over to what-if inheritance scenarios with him basically saying that any inheritance he received would be ours and he expected the same of me, though he understands if I don't want to do that. I told him that any inheritance I receive is mine with only my name staying on it. That doesn't mean he wouldn't benefit from it through me (as in it'd give us a better cushion and ease money worries down the road), but nothing would be transferred over to joint ownership between us. As of right now, I stand to inherit significantly more than him, his being little if anything.

So, I'm curious to know other's opinions and how you work it. If you have separate accounts are you suspicious that your spouse is plotting something else, do you feel "what's mine is yours", or how do you find some balance and harmony regarding this?

I'm amazed after 20 years of marriage how much we butt heads on this stuff or, more importantly, can not even understand what the other is trying to communicate. And, yes, the trust factor obviously needs some work. We'll see what time has to say about that.

Dr. Phil would just have a feast with us.

 

[Chelhxi]

Well, we're DINKs and will be staying that way. But we did discuss all this prior to marriage, got a pre-nup and got wills done immediately after marriage.
It worked best for us to just keep everything separate as we were 30, had assets and were both used to controlling our own money. If there were kids, we'd probably just add a joint account, or he'd give me some of his money to move into my personal accounts, as he'd have been the primary income earner in that situation.
But, the separate accounts is generally about daily money management, maintaining some independence, and as a just in case thing. We also have different investment styles. However, there's no secrecy at all. I track spending and investments for both of us and I usually show him the numbers every few months. And in our wills everything goes to the other party. So, really we do consider it "our" money, but we can make our own decisions about spending and investments. Inheritances (which neither of us expect a big number and it would likely be well after we're already financially independent so won't matter much) will be individual, but that doesn't mean we wouldn't chose to share with the other person.
You're in a tougher situation since since you don't both have income and there appear to be trust issues. Ideally you would have had a plan in place as soon as it was decided you would be a SAHM. You'll have to attempt to find some kind of compromise that doesn't force you to give up your personal security, which seems like you have already done, to some extent. But I have no advice on exactly how to do that.
Also, I don't know how it works in the US, but cannot he contribute some of his income to retirement accounts that are in your name? That's how it works in Canada, and if my husband was the only one working I'd insist that his retirement accounts were the same size as mine.

 

[HornedToad10]

I'm not going to address the entire relationship concern of wanting accounts to be able to leave, cover backside, or being fearful of leaving. I will say that my understanding is that most of the time the name on the account is irrelevant in a divorce proceeding and the assets are divided so you are both probably placing stress on a marriage for no reason (depending on the state you live in).

We do have yours, mine and ours accounts. However, 99% of the income goes in the ours checking and savings accounts and the individual accounts get $200/mo for personal purposes. This allows for her going to the spa or me buying a book or toy and not having it affect out join account and budget. This design makes it more peaceful where we can both do anything with our money and the other doesn't need to know or care what we did with it.

The other advantage is that we can buy each others gifts or treat one another to dinner and it's actually a treat. I'm using my personal money to take her out or buy her a gift and vice-versa instead of just feeling like we're spending joint money on each other.

However, we treat the vast majority of our income as joint and make joint decisions and that works very well for us. Retirement accounts are obviously separately named and I have much more than my wife but it's irrelevant if a split ever did happen since they would just split my retirement account with her to even it out.

It sounds like the finances are a symptom of a bigger issue and you need to address that though.

 

[haha]

I'm amazed after 20 years of marriage how much we butt heads on this stuff or, more importantly, can not even understand what the other is trying to communicate. And, yes, the trust factor obviously needs some work. We'll see what time has to say about that.

Dr. Phil would just have a feast with us.

Unless one or both of you has actual separate property in the legal sense, and that person or persons have been vey careful to never muddle it, even for a day, it doesn't matter how you title the accounts. They are all one big pot, I believe in any state. While some states make it very clear with the concept of community property, I think all sates now have some form of equitable distribution, though in a community property state there may be more power to the default of a 50/50 split.

After 20 years of marriage, there is little chance that your account labeling will mean anything.

So you could either accept the reality that you are financially one with the Mr., or bite the bullet and start proceedings. Or, you could go on with the current fiction, it has worked for 20 years, right? A lot of marriages have sustaining fictions.

Ha

 

[freebird5825]

The best answer I can contribute is to tell you to research the governing laws of joint marital property in your state. Most states have a Bar Association website where links to state laws will be available.
Inheritances may be a completely different ball game, depending on the state.
If you have good reasons to want to keep any inheritance separate, then only you can answer that question for yourself. Consult an attorney if you want the best answer for your situation.

During my 20 year marriage, everything was registered as JTWROS.

 

[sheehs1]

Sassy
We keep everything separate, all checking, savings, investments and retirement accounts. It works well for us and it is backed up by a "Post" Marital Property agreement signed after marriage. At least in our state it is considered the "division of property" in a separation or divorce situation. We wrote it ourselves, researching the required legal clauses and had a lawyer review to give his o.k. that it would pass muster. So while others say "it is community property", I believe that might be in the absence of such an agreement. Check with your state and perhaps a lawyer friend to see if the divorce courts in your state "honor" post marital agreements. You may be able to find that information on the internet for your state.

Perhaps you can have your separate accounts that will give you some comfort and independence while things are still o.k with the marriage and try to work out an amicable agreement of what needs to happen if the marriage ends up not being o.k. with either one of you. After all, you are the vulnerable one without an income at the moment so hopefully your husband won't take too much offense to that approach. It is actually a very mature and responsible thing to do. There are too many situations where one or the other has sole access to accounts that are quickly drained when the word "divorce" surfaces. This leaves you vulnerable as well.

The separate accounts give me full access without hindrance to my own money while I'm still alive. For me, that is a plus. The Post Marital Agreement gives me a level of security in the event the marriage doesn't work out. This security was/is hugely important to me. In a sense, it leaves no question, no second guessing, no wondering and allows both my husband and me to be comfortable with our arrangement. My will along with "transfer on death" titles and beneficiary designations takes care of things at my death. This arrangement has worked for us for over 20 years.

We share all household expenses. In fact, my husband gives me a check at the beginning of every month and I handle all the family bills. We each handle our own individual bills.

Inheritances are not normally considered community property. It is yours and if you want to keep it yours, do not co-mingle or co-title the funds. Same for him.

P.S. Ours is a blended family of 20 plus years and we each had our own assets going in.

 

[donheff]

I agree with Ha. Seems like a lot of work to prop up a fiction.

 

[ERD50]

....

This conversation also carried over to what-if inheritance scenarios with him basically saying that any inheritance he received would be ours and he expected the same of me, though he understands if I don't want to do that. I told him that any inheritance I receive is mine.

...

I'm amazed after 20 years of marriage how much we butt heads on this stuff ...

So what's his is ours, but what's yours is yours? And you're amazed that you butt heads on this??!!

I guess I'm more amazed that you've managed to stay together 20 years. I wonder if your DH is posting to a forum right now, and what that story would sound like...

-ERD50

 

[Sassy]

No ERD50,

I did not say what's his is mine and what's mine is ours. You misread that.

When it comes to inheritances brought in, I think of both of those as separate. Please keep in mind that there will most likely be a big disparity in inheritances, through both luck, chances, and LBYM factors and I am of the opinion that I will share any inheritance with him and my kids to make our lives better, but I'm not transferring ownership names where he has any control or buy/sell say. Also keep in mind that this involves a family business he (nor will he in the future) has no part of, so hopefully that gives some additional understanding. As I discussed with him, if this was a generation down with our daughter having this conversation with her husband, I would want it very clear that this is her money. She can share what she wants, but the ultimate goal is make sure SHE benefits from our hard work. Mr. Sassy would agree with me on this.

I'm simply raising the issue and inquiring because of current things that have come to light in the last few months. I am feeling very vulnerable and I want to make sure I'm not left hanging again, especially since I have zero income. Being lied to about finances tends to make one a bit jaded, I think, and also, realistically I'd say, gets them exploring all scenarios. So, I want to know if others have a mine, yours, ours and are able to do so w/o friction. I would say from prior experience that,yes, it can work, but now I'm being met with great resistance to it from Mr. Sassy.

Also, Ha, the "sustaining fiction" did hit a raw nerve. I would not have said that we were living an illusion for the last 20 years, so please don't make that assumption. I would have said up until a few months ago that everything was fine, aside from the usual marital bumps. And I would not have called my marriage fictional. Right now, though, it's an academy award winner as very few know what's really going on.

Believe it or not, folks, Mr. Sassy and I are good friends and we do a great job parenting the kids together, and we have dreams/goals for our future together. Yes, we have some nasty issues to work through, but don't write us off just yet. We're not. I don't need my marriage blasted--we do well with that on our own. What I need from you guys is to know how it works in your household and the approaches you take on deciding whether or not to co-mingle all accounts, some accounts, or no accounts.

 

[ERD50]

No ERD50,

I did not say what's his is mine and what's mine is ours. You misread that.

....

What I need from you guys is to know how it works in your household and the approaches you take on deciding whether or not to co-mingle all accounts, some accounts, or no accounts.

OK, when I posted that, I was not familiar with your earlier thread (which I just skimmed a bit now) -

http://www.early-retirement.org/forums/f26/newbie-needing-advice-65995-2.html#post1304256


Based on what I gathered from my quick skim, this is not a separate account issue, in the usual sense, regarding issues when one spouse passes or is otherwise incapacitated (which is what I first gathered from the title). Your issue is you don't trust your spouse to manage the money. What other people do is not relevant, unless they also have this trust issue. And as others have pointed out, laws will co-mingle this regardless.

You need to address that trust issue, it's not a financial question. I'm not Dr Phil, so I'll bow out.

Good luck to you and Mr Sassy.

-ERD50

 

[haha]

No ERD50,

Also, Ha, the "sustaining fiction" did hit a raw nerve. I would not have said that we were living an illusion for the last 20 years, so please don't make that assumption.

I didn't intend to make you feel bad, or to challenge your marriage. I have been down these same roads myself, and there is plenty pain all around without some yahoo (me, in this case) hurting your feelings on a chat board. I am sincerely sorry for hurting you.

The only fiction I was referring to was not your marriage, but the separate ownership idea, which in the absence of legal contracts is a very specialized area, and even in the presence of legal contracts is very often tossed out by a judge. As you know, even retirement accounts are up for grabs in a property division, as are pensions. This is why certain foreign countries are full of guys living on SS payments. Divorce doesn't grab those.

If his earnings are supporting you, and he has more assets, in his mind anyway, and you got a large inheritance which you took steps to keep separate property (which I believe should be doable, especially if you are certain enough of the inheritance and its size to make the effort and marriage risk worthwhile), I think you should consider that most men are not totally stupid and likely will be taking steps to free themselves from the marriage, which again, to many if not most men, given all the details that you have shared, will seem to be less than equal.

I am basically in favor of people keeping their inheritances intact, but it takes some social judgment to pull off. Overall, it is my feeling that we Americans put more faith in marriage than it deserves, given the social realities we face. Though merely being on this board may put a person in a different a priori class, as it seems that posters here have much more stable marriages overall than others of similar wealth in the US. So the background divorce rate (or Bayesian population rate) for board members may be quite a bit lower than in the population overall.

Ha

 

[Arifriekinel]

I'm young and unmarried but living with my partner for a couple years now. We have all of our finances in the same accounts, everything split 50-50, but we both came into the relationship with no debt and no assets except for his ROTH IRA, which obviously his is his and mine is mine.

But we also both have 50% ownership in our corporation together, where most of our income comes from. Its worked for us, but our situation is very different from yours, so I'm not sure just how applicable it would be.

We did really like HornedToad's idea of allocating our own small amount each month to whatever we want with. Right now, we just do whatever we want anyway, which I think results in us spending more than we would otherwise. At the beginning of the month, we put about 50% of our check into savings, then spend the rest as we wish, depositing $1 more into savings for every $10 we spend. I think it'd be good to limit it at $200 recreational spending, $100 each, but we can buy each other things here and there. We both thought it sounded practical and fun, so thanks HornedToad!

We plan on just keeping track of this in a spreadsheet rather than open up two new accounts to hold the money in.

 

[gerntz]

If a couple's estate exceeds the $5.25M Fed inheritance tax limit - & perhaps there are states with lower limits - then you may very well want accounts titled separately to avoid all/some of those taxes.

 

[donheff]

I too used the word fiction Sassy but I was not referring to you marriage. Just the illusion that separate accounts protects your assets. I do believe inherited assets may be treated differently. The can certainly be protected thru a trust. I share your sentiment about leaving you estate to your daughter and not some future ex sil.

 

[Ready]

I have always kept my accounts separate from my partner, but mainly because we were not allowed to get married and enjoy the benefits (and disadvantages) of marriage. However, we split our household expenses 50/50, so it is mainly our savings which we maintain complete independence on. Each of us is POD to the other on all of our bank accounts and we hold our home as JTWROS. It seems to work great for us, and occasionally we do have some disagreements about finances, but because we maintain some independence, we have a lot of control over how we spend our money, and it keeps us both feeling in control.

I don't see any reason that married couples could not do the same thing if they wished. It just depends on what they are trying to achieve, and I suppose whether children are involved.

 

[ShortInSeattle]

Fair enough that, yes, I'm positioning myself in case things go south again in the future, but I think it's reasonable considering I currently have zero income and little in just my name to begin with.

From the other posters, it sounds like having a separate account won't matter much, as community property would be the rule if you do split. It's symbolic, rather than practical, and it does send a loud and clear message that you want a safety net. Your reasons for wanting this make sense, but I imagine it is still a blow to your husband.

This conversation also carried over to what-if inheritance scenarios with him basically saying that any inheritance he received would be ours and he expected the same of me, though he understands if I don't want to do that. I told him that any inheritance I receive is mine with only my name staying on it. That doesn't mean he wouldn't benefit from it through me (as in it'd give us a better cushion and ease money worries down the road), but nothing would be transferred over to joint ownership between us. As of right now, I stand to inherit significantly more than him, his being little if anything.

Forgive me if the following paraphrasing is a bit snarky. Here is how this scenario sounds: You tell your husband you want to have some escape money in case things go south. He says fine, I get some me-money too. Then he asks "what about inheritance money - who gets that?"

This sounds fairly dysfunctional. You know that of course. This isn't a money problem really, it's a trust problem. You probably know that too. The money thing is a red herring. A competent counselor may help you refocus your conversations to more productive areas.

Wishing you both all happiness.....

 

[pb4uski]

Despite being married over 30 years, we still have yours, mine and our accounts. Candidly, the yours and mine accounts are very inactive and I'm not sure why we keep them other than there is enough in each of them to tide us over for a while should we ever split up.

The risk I see with joint accounts is that if all your money is in joint accounts these isn't anything to prevent a spouse about to make a move to transfer all the joint funds to an account in their name. While such a move would ultimately get unwound by the courts, in the interim you still need to eat and pay bills.

DW received a modest inheritance when her mom passed and it went into her investment account. My inheritance will likely be much larger and will likely go into my investment account. We recognize the reality is that if we were to split that it wouldn't matter, but we do it anyway only because it is easy to do.

I'm not sure how any of this would apply to Sassy's situation other than I think it is important that you have some money in your name to tide you over for a short period of time should you ever do decide to bolt. But those who have gone through that process would have better insights on that issue than I.

 

[HighRoller]

Just curious as to how everyone handles this and views it in their own households.

Married about 37 years now and have always had joint accounts where possible.

 

[mpeirce]

We have individual accounts in two places:

(1) IRAs because that's how they work

(2) We keep more than $250,000 in on bank (a ladder of CDs) and the $250,000 FDIC maximum applies separately to "his", "her", and "our" accounts

For the rest, it's just one big pile our ours...

 

[meierlde]

We have individual accounts in two places:

(1) IRAs because that's how they work

(2) We keep more than $250,000 in on bank (a ladder of CDs) and the $250,000 FDIC maximum applies separately to "his", "her", and "our" accounts

For the rest, it's just one big pile our ours...

Actually you can get 500k more protection by setting up payable on death accounts, that is yours payable on death to your spouse and vice versa. So following this it is not that hard for a couple to get 1.25m in a single bank, and of course there are multiple banks as well.

 

[Animorph]

We use separate accounts, but many of them are actually jointly held. All income is divided equally, after common expenses. We have "individual" accounts for our shares of income, however it was easiest to use joint titling of the accounts. Retirement funds, 401k/IRA/Roth/taxable are held in either name, as necessary, but are treated as one common portfolio. We each manage our own credit cards and checking accounts. We've pretty much had it like this since we got married, over 30 years now.

The benefit for us is that we each get our 50% equal share of income, but we each have individual accounts for our own spending. No family discussions required for individual spending. Easy enough to do with individual accounts if you like. For us, joint accounts mesh better with our revocable trust accounts and let me easily transfer funds as needed. Obviously that requires a level of trust, though it's all very open if everyone has the passwords and access to the budget.

 

[Badger]

We do have yours, mine and ours accounts. However, 99% of the income goes in the ours checking and savings accounts and the individual accounts get $200/mo for personal purposes. This allows for her going to the spa or me buying a book or toy and not having it affect out join account and budget. This design makes it more peaceful where we can both do anything with our money and the other doesn't need to know or care what we did with it.

The other advantage is that we can buy each others gifts or treat one another to dinner and it's actually a treat. I'm using my personal money to take her out or buy her a gift and vice-versa instead of just feeling like we're spending joint money on each other.

However, we treat the vast majority of our income as joint and make joint decisions and that works very well for us. Retirement accounts are obviously separately named and I have much more than my wife but it's irrelevant if a split ever did happen since they would just split my retirement account with her to even it out.

We have been doing the same thing for the past 26 years and it has worked well for us. I tend to invest most of my allowance since I don't have a lot of "wants" and she spends most of hers. But I have also been able to buy what ever I want with it most frequently being a nice gift for her.

I never had any children. My wife had 2 grown children and a granddaughter when we married. Since then 2 more grandsons and 2 great-grandkids have been added. Except for a small sum for my sister and a little to my undergrad school the great majority of what is left will go to her children when we are gone. I don't know where else it could go so they might as well use it to make life easier.

Cheers!

 

[scrinch]

For 28 years we have only had joint accounts except as required for retirement accounts. We've both had small to moderate-sized inheritances, and those have gone into joint accounts too (except for an inherited IRA, but the required distributions from that go into a joint account). When our parents die, the inheritances will be larger (10-20% of our networth) and expect those will stay titled separately. I expect to treat mine as joint property though.

My mother and step-father, married for 46 years, have always kept a fraction of their savings in separate accounts. It has been a noticeable source of friction over the years...the only times when I've heard them talk about mine and yours instead of ours. I think my mother wanted the accounts kept that way because of feeling quite financially vulnerable after divorcing my father with three small kids.

 

[LakeTravis]

Sassy
We keep everything separate, all checking, savings, investments and retirement accounts. It works well for us and it is backed up by a "Post" Marital Property agreement signed after marriage. At least in our state it is considered the "division of property" in a separation or divorce situation. We wrote it ourselves, researching the required legal clauses and had a lawyer review to give his o.k. that it would pass muster. So while others say "it is community property", I believe that might be in the absence of such an agreement. Check with your state and perhaps a lawyer friend to see if the divorce courts in your state "honor" post marital agreements.

We did the same - Texas does recognize a properly drafted and executed division agreement. It clearly defines separate property both present and future. Naturally, it's something we both hope will never be put to test, but it's there.

 

[haha]

In Washington you can get something called a legal separation and property division, and then continue living together if you want. The only person I know who used this type thing had a good megacorp job and health insurance, while her husband was a self employed contractor who would have had trouble getting insurance. She didn't really want to be rid of him, but just to separate herself from his business risks and decisions.

Washington courts are pretty free about disregarding anything that they feel like disregarding, commonly ruling that post marital agreements and many premarital agreements are effectively coerced. I won't reiterate my feelings about family court and family lawyers; only I will say that both are best avoided when possible.

Ha