Separate Assets

[stepford]

I've heard it said that couples' financial arrangements can be broken down into "1 account", "2 accounts" or "3 accounts". Traditional marrieds who pool everything in common are the first sorts while folks keeping everything separate are the second.

D"W" and I have been happily unmarried for over 20 years and have lived for most of that time in a house I bought before we met. For us 3 accounts makes the most sense. She has her assets and I mine, but we have a joint account that we fund equally every month. This account pays for our living expenses and recurring costs like insurance. When a big expense like a vacation is coming up we'll both dump extra cash into the shared account.

[walkinwood]

Quote:

Originally Posted by MBMiner Absolutely not. Where did that idea come from? Bruce

I searched for it and found that it is indeed the case in some western states. Having said that, I'm no expert.
Community property - Wikipedia, the free encyclopedia

[JPatrick]

Quote:

Originally Posted by MBMiner In your example the basis of the portfolio should have been stepped up on your mother's death based on date of death values. You could easily go back and get those prices and manage your portfolio properly. Bruce

Getting those values considering all the splits, mergers, etc, would likely be impossible, or totally impractical. We can withdraw any fresh divies and or cap gains if needed, but selling the holdings would be a nightmare.
No need for the money, and any managing/rebalancing needing to be done can be handled using the generated income.
Assuming I die first, DW will get the whole stash with a stepped up basis.
Happy everything.

[Sunset]

Quote:

Originally Posted by Ronstar We have an arrangement similar to op. Real estate is joint, but all accounts are separate. Separate ira's. She pays some bills. I pay the rest. We're both retired. She has a pension. I'm living off my savings. We are both on her retirement insurance. We keep each other informed of our finances. Works very well for us. Sent from my iPad using Early Retirement Forum

Ditto to a T

[Hermit]

The late DW and I were married for 30 years. She didn't have two nickels to rub together when we were married. I was a little better off and always the larger financial contributor with her contributing a large amount after the kids were in high school. Everything was in both our names. Our credit cards had the same number and we both wrote checks out of the same checking accounts. At one point she wanted her own account to use as she saw fit and we set her up an account. She never used it.

If I were to remarry, the 50-50 funding of common expenses and everything else separate seems like the best approach because of kids and prior charitable commitments.

[2B]

Quote:

Originally Posted by JPatrick Getting those values considering all the splits, mergers, etc, would likely be impossible, or totally impractical. We can withdraw any fresh divies and or cap gains if needed, but selling the holdings would be a nightmare. No need for the money, and any managing/rebalancing needing to be done can be handled using the generated income. Assuming I die first, DW will get the whole stash with a stepped up basis. Happy everything.

Historical stock prices exist so you can see what the price was on the day of her death. If you have been reinvesting the dividends that would make it more complicated.

I had a similar situation with a single stock in my FILs account. It was a meaningful amount of money but wasn't essential to pay for his care. I had made an estimate of the cost basis but he had acquired these shares at different times. I wouldn't have been real comfortable in an IRS audit so we just sat on the stock. He passed away and we sold right after transferring the shares to DWs and SILs Vanguard accounts. We sold immediately.

[Newventurer]

Quote:

Originally Posted by Philliefan33 Joint accounts and ownership of everything, except of course the individual TSP/401K / IRAs. We funded the retirement accounts as a team with our pool of money. We've been married over 25 years. DH came into the marriage with more than me but graciously considered everything "ours" right from the beginning. It works for us.

This describes my DW and I. Both were divorced and we were married 7 years ago. We decided from the beginning to share everything and pool all accounts (except 401k) which wasn't that hard as our assets were similar, though mine were growing faster due to salary and benefits. Maybe I was too lazy to go through the weekly/monthly effort of reconciling and reminding her about bills due. I do all the finances so that may have also made me more comfortable with the idea.

There are times of stress especially when dealing with each of our kids (college, weddings, etc) from prior marriages. It forces the discussion about what is fair and even. Some would call it stress and it is but it is also one of the things that 'glues' our commitment to each other.

I guess we can each choose what we fear to lose the most, in my case it's not the money.




Sent from my iPad using Early Retirement Forum

[JPatrick]

Quote:

Originally Posted by MBMiner In your example the basis of the portfolio should have been stepped up on your mother's death based on date of death values. You could easily go back and get those prices and manage your portfolio properly. Bruce

At the root of my problem (or nonproblem really) is the fact that from day one everything in this portfolio was jointly held with me.
When Mom passed the CPA said I could sell it but the basis would be set at when she bought it. Well no easy way to do it at the time, so in the drawer it went.
So now this portfolio contains gems such as this--In the sixties she invested $500 in "Public Service of Indiana," utility with big divie. It was taken over by another utility, then that one was taken over by another, then Duke Power bought the whole mess. Then Duk spun off SE to shareholders. DUK recently did a reverse split. Of course each of these happenings involved a change in share quantity and value.
So it's Warren Buffet stories like this spanning 55 years that makes the challenge what it is.
The good news? I am 100% content to let it ride, but for others maybe it's a record keeping warning.

[Gill]

Quote:

Originally Posted by JPatrick At the root of my problem (or nonproblem really) is the fact that from day one everything in this portfolio was jointly held with me. When Mom passed the CPA said I could sell it but the basis would be set at when she bought it.

Unfortunately, your CPA was dead wrong. As I understand it, your mother put the securities in joint name with you. When this is done with a nonspouse and the original owner dies, there is a 100% stepup in the basis to date of death values. Therefore, anything that took place before her death is irrelevant. If you have a schedule of the joint assets at her date of death and the values on that date, there is your basis.
Bruce

[flyingaway]

For those of you who keep separate assets, must you have a prenuptial agreement? Otherwise it does not matter what you agreed orally before, at the time of the divorce, everything should be divided at the 50%/50% line. It that right?

[athena53]

I've been through these discussion on several Boards (starting with theknot.com when DH and I were planning our wedding in 2003). No matter what system you have, it works if you're both on the same page and it won't work if you aren't.

First husband was financially irresponsible. We kept our finances separate but he spent everything he made and maxed out his credit cards, so when an emergency came up I was the only one with funds to pay for it. Not a happy way to live.

Second husband: totally different and very low-maintenance. He'll iron patches on his jeans rather than throw them out when they develop holes. We still have separate accounts but at the end of the month he hands over what he hasn't spent out of his SS and I figure out what to do with it. Before I retired we saved most of it. Now most of it goes for general living expenses. He's an Authorized User on my credit cards. I'm happy being the Financial Control Freak and he's happy that I deal with the money.


We did have an interesting discussion when he was preparing his will. He pointed out that if I died unexpectedly, he wouldn't have anything to his name except two cars and whatever is left in his checking account. Our solution was to re-title $25K of bond funds in my Fidelity account into a new account that's Joint Tenants with Right of Survivor. That would give him some breathing room while the paperwork is sorted out.

[2017ish]

Quote:

Originally Posted by athena53 I've been through these discussion on several Boards (starting with theknot.com when DH and I were planning our wedding in 2003). No matter what system you have, it works if you're both on the same page and it won't work if you aren't. ....

Amen and Bravo. This is one of the best (and most pithy) summaries I've seen on this recurring topic.

[jcretire77]

Thanks everyone for your replies. We do have a pre-nup. We have added each other in most cases to the others accounts. I still need to create a will (I know I am a slacker), but assuming that I kick it first would be happy for 95% to go to her and her two children. My two sisters have been just fine without any of my money.

Another question. With many people having separate tax deferred accounts do you both try to get to a similar AA? My wife is more conservative than me, but we end up at about 70/30 and very close to retiring. Still unsure whether to be more conservative for the next couple of years or let 'er ride. (I have a couple of years in cash if something hit the fan)

[2017ish]

Quote:

Originally Posted by jcretire77 ... Another question. With many people having separate tax deferred accounts do you both try to get to a similar AA? My wife is more conservative than me, but we end up at about 70/30 and very close to retiring. Still unsure whether to be more conservative for the next couple of years or let 'er ride. (I have a couple of years in cash if something hit the fan)

We treat everything as one portfolio for purposes of asset allocation. Especially with both of us still working, it enables us to avoid the nastiest choices in DW's 401k--and after we retire, my tax-preferred accounts are so much smaller than hers that it would be hard to execute the slice/dice allocation that we want if we didn't lump everything together.

[Big_Hitter]

We kept things separate for about 3 years after we got married (25th this year) - that's how long it took her to trust me.







She's been FIRED since 1997, or does it not count as a FIRE if I'm still working?

[rodi]

We were late to marriage game - both of us owned homes, and were middle aged (I was 37). We kept things separate at first... I even charged him rent when he moved into my house... but it matched, coincidentally (not) the rent he was getting on his house. (My house was in a better neighborhood - and the rent I charged was the same I'd charged a friend who shared my house for a few years.). We split the bills 50/50.

When we had the first kid, and followed in short order by moving across the country to my home town... we merged finances. We haven't looked back.

I keep my inherited IRA in my name. Our IRA/401k moneys are separate as well.

For asset allocation I treat it as one giant pool of money. He's much more conservative with asset allocation - so his IRAs are mostly CDs... that fills the cash bucket of our AA. We have a joint brokerage account, partly funded by inheritance... and partly funded when I felt our joint savings was full enough and swept some to the brokerage.

We have two credit accounts - with both of us on the account. He's primary on one, I'm primary on the other.

I pay all the bills. Do all the money transferring. Rebalance the portfolio as needed. I'm a control freak. He's happy to let me do the work.

[eta2020]

If you are FI and you are married since 20's to the same person then surely your spouse had done something right. In such situation I don't even understand concept of your and mine.

But if you are divorced and then married again at 50....yea I understand it.

[nuke_diver]

We are mostly separate since we also got married later and it didn't make a lot of sense to merge everything when we already had a system. As I plan for retirement we will probably need to do some rethinking. We have a joint acct but rarely use it. However without a paycheque coming every 2 weeks it might be easier to fund household payments through a joint acct

Neither of us are spenders so there isn't an issue with hiding things from each other. Generally we buy things that are needed. In the case of big items such as the recent remodel they are split but other things like cars...well there hasn't been a new car for 20yrs so not sure how that will work out :P

[haha]

Quote:

Originally Posted by Independent I can see that people who had ugly divorces and are somewhat gun-shy would keep them separate.

In this case they should likely remain single.

Ha

[freebird5825]

In a perfect world without laws and gold-diggers of either gender, 2 people should be able to live together, married or single, and decide what they want to do financially.

Unfortunately, we do not live in a perfect world.

I am female, widowed, with modest assets. Mr B is divorced, with modest assets. He has kids, I do not. So we figured out what fits our live-in relationship in the state we reside in, without the laws interfering. It is a true partnership where no legislation can muddle up our lives.

Now THAT is true freedom.

Every situation is different. As long as a fair and equitable financial partnership exists, it's all good.