Consumer Law

Joint Versus Separate Accounts for Married Couples

Are you thinking about getting married? Marriage can bring great joy and stability to a relationship. It also brings many legal and practical rights, protections and benefits. Finances can play a big role in making or breaking a marriage, so work with your spouse (or future partner) and keep money from causing problems.

Everyone has financial issues. Married couples must decide if they want to share their money, keep it separate, or some of both. Know the advantages and disadvantages for financial accounts, and pick the best options for both of you.

Having a Joint Bank Account

A joint bank account is owned by more than one person. Any joint owner can use the account without the permission or cooperation of the other joint owners.

Practical Pluses

A joint bank account is the most common option for married couples. Joint accounts offer these advantages:

  • A single joint account is easy to manage
  • No limits on access if one spouse is unavailable or dies - joint tenants with rights of survivorship (JTWROS)
  • Paying shared bills and expenses from one account helps keep finances fair and avoid arguments

Marriage, Finances and Values

Joint accounts are a matter of values for many couples. When they said "I do" at the altar, they view the commitment to sharing their lives to include their money. Many people find joint accounts foster communication and honesty.

It's still common for one spouse to take time off from work, sometimes for years to raise children or go to school. Joint accounts help the stay-at-home spouse have a meaningful share and say in the finances. Joint accounts can help keep your financial and credit files active.

Having Separate Bank Accounts

On the other hand, many married couples choose to keep separate bank accounts. This is most common when both spouses marry later in life and have successful careers. They're used to dealing with their finances. Many times their financial histories are complicated by previous marriages, student loans and credit card debt.

The main advantage to separate accounts is the freedom and fairness it can provide to both spouses. Each person can buy what he or she wants and not be questioned about the purchase price. It gives privacy to spouses who don't want to completely share how they use their money.

In some cases, you need to keep a separate account if you want funds to keep their character as your separate property. Issues about classifying property as separate or marital can come up in situations such as divorce or debt collection. State laws vary, but generally, you avoid problems when separate funds have always been kept apart from martial assets.

Using Joint and Separate Bank Accounts

Some married couples try to achieve the benefits of sharing and independence by having both joint and separate bank accounts. They both put a set amount of money in the joint account to pay the regular expenses, such as the mortgage, car payment and utilities. Any extra money goes into their separate private accounts to be spent any way they want.

This option allows the married couple to share in the expenses while not having to be questioned about personal purchases. However, there are some disadvantages such as:

  • You need to work out how unusual or extraordinary expenses will be paid
  • Balancing issues if there's a lot of disparity in your incomes. Do you divide bills equally or by what each of you make?
  • Multiple accounts are harder to keep track of - there's no doubt more accounts means more reconciling each month

There's no one right way to set up your bank accounts; it's different for every couple. The subject doesn't have to be a source of conflict, either.

Talk about these money issues before getting married so each of you knows the other's feelings about money, who's going to pay bills, make decisions about large purchases and the like. If one of you has more assets than the other or want to protect yourself in case of divorce, you could even consider a prenuptial agreement to make sure you feel more protected.

Questions for Your Attorney

  • Should we have separate bank accounts if one spouse has to pay child support payments?
  • How can I gain access to my spouse's separate bank account in a medical emergency?
  • Can I give access to as many people as I want to a joint bank account? Can I restrict access to require signatures from two joint owners to remove money from the account?
  • Can separate bank accounts be used to protect assets from creditors?
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