Marrying Your Money: Everything You Need to Know About Joint Bank Accounts
by Karina Parikh
As a soon-to-be married couple, you’ve shared a lot with each other: embarrassing childhood stories, toothbrushes, and plenty of Instagrammable meals. But as you move on to the next phase of your relationship, you may be asking yourselves questions like: “Does splitting the bill mean the same thing once you’re married?” The answer lies in the types of financial accounts that you decide to have.
Although most people are in favor of joint accounts—76% surveyed to be exact—younger generations are increasingly in favor of keeping things separate. While it’s largely a matter of preference, there are some identifiable benefits and drawbacks to both joint and separate accounts that you should consider before making a final decision.
What is a Joint Account?
A joint account is any account that is shared between more than one individual (in this case, you and your spouse). You can use one to save up for a common goal, like a new house or a dream vacation, or to pay off shared expenses, like your mortgage payments or groceries. Since both you and your spouse have equal ownership over the account, you can initiate a transaction as you please and vice versa without needing your spouse’s permission, depending on the type of joint account that you have.
Types of Joint Accounts
Not all joint accounts are created equally. Two popular types of joint accounts for couples are the Joint Tenants with Rights of Survivorship Account and the Tenants by the Entirety Account, so we’ll focus on those two below.
A Joint Tenants With Rights of Survivorship Account ensures equal ownership of the account between spouses. If one spouse passes away, the entire balance will go to the surviving partner without having to go through what can be a lengthy legal process to receive those funds. Creditors can collect assets against the account no matter who deposited funds in it.
Great for: Accounts that are saving or paying towards a common goal, couples that are on a similar financial footing and know each other’s finances well, and couples that are very communicative and trusting when it comes to managing their finances together and are organized when it comes to balancing the checkbook for the account.
Drawbacks: Both parties are equally responsible for the account, so if your spouse overdrafts, you’re responsible for it too. Remember that joint accounts give you access to both assets and debts, so it’s wise to steer clear of this type of account if your spouse has debts that you don’t want to pay off with your own money.
A Tenants by the Entirety Account also ensures equal ownership between partners, but both partners must sign off on each transaction that goes through the account. Like the Joint Tenants With Rights of Survivorship account, all of the balance goes to the surviving partner should one of them pass away. Creditors can only collect assets that the couple acquired together and if they have permission by the couple to do so.
Great for: Couples that want to make every decision together and couples that want to keep each other in check every step of the way.
Drawbacks: Needing permission from both partners can make decision making burdensome. Some people may be turned off by the idea of constantly needing their spouse’s permission when making financial decisions.
When Not to Have a Joint Account
Many couples prefer to keep separate accounts for a variety of reasons. A person may have more debt (like student loans) or completely different spending habits than their spouse, making it difficult to manage a joint account. Other couples believe that having separate accounts helps each spouse maintain financial independence and also protects their money in case things go south in the relationship. Of course, a couple may simply find it less stressful to manage two different accounts than one together. If you can figure out how to pay for shared expenses separately, keeping accounts separate may make the most sense to you.
Although it seems pessimistic to think of a marriage falling apart before it even begins, it’s a necessary thing to consider before you open a joint account. It’s tough to divvy up shared funds in such volatile circumstances, and having a joint account means you or your spouse can empty out or close the account without one having to consult the other.
Sharing Money Without a Joint Account
Not having a joint account doesn’t mean that your spouse can’t access your money if you need them to. If you have the option to link accounts through your bank, you can transfer money between your and your spouse’s accounts without having to share an account. You can also open a joint account but link your individual accounts to the joint account so that you have the best of both worlds.
You can also name your spouse as a beneficiary or give them power of attorney over your individual account. In the event that you pass away, your spouse will automatically gain access to your account, but they won’t have access to it beforehand.
Managing your money after marriage doesn’t have to be a pain point in your relationship, and it may take some time before you figure out what works best for you. Setting up a Tendr registry is a perfect opportunity to open a joint checking or savings account to receive your Tendr funds and decide how to share the money together.
Ready to start sharing funds for your future? Register for cash gifts with Tendr here.
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