accounts, mortgages, credit cards, investments accounts ó in most
cases, couples automatically join their finances soon after marriage
and then begin filing joint tax returns within the first year of
marriage. But for older, more independent adults or those coming into
their second marriage, joining finances (or not joining finances) is
more complicated and something that should be discussed and studied
with a competent financial planner.
Julie Ellenbecker-Lipsky, president and wealth adviser at the
Ellenbecker Investment Group, there are pros and cons to cojoining
finances. "On the pro side, joining finances ensures that the
couple has aligned their financial values and goals. It provides
confidence for both spouses in terms of financial security.
Understanding each otherís finances will also be valuable if one
spouse becomes disabled or unable to make financial decisions,"
president and founder of Spectrum Investment Advisors, says that
cojoined finances make things easier when it comes to managing
budgets, paying bills and planning for the future. "From an
estate planning perspective, cojoining finances is a useful tool. If
one spouse dies, the assets pass seamlessly to the surviving spouse
without getting held up in probate. By sharing money, couples are able
to share control, which can lead to positive outcomes, and they gain
more trust in each other when their assets and debts are pooled. Itís
no longer Ďyoursí or Ďmine,í but Ďours,í" he says.
separate also has its proponents, since it allows for autonomy with
spending as well as financial independence. Ellenbecker says that in
her experience, older and more financially independent adults tend to
take this approach. "Keeping assets separate makes
estate-planning conversations less complicated and provides comfort to
adult children who might not understand their parentís new spouseís
financial situation. It might make sense to keep assets separated that
are earmarked for specific beneficiaries or specific purchases.
Inherited assets are often kept separated for estate planning
purposes," she says.
to show that pooling money in marriage makes a relationship more
likely to last. A 2010 study funded by the nonprofit National Center
for Family & Marriage Research found that "results show a
strong association between moving money out of joint accounts, and
consistently keeping money separate, and couple breakup."
For many, the
solution is a mix of the two. According to a survey of 1,000 Americans
carried out by TD Bank, 42 percent of those in a relationship who have
joint bank accounts also maintain individual accounts. Many use what
is known as the three-pot system of couple finance ó spouses keep
their separate savings accounts for discretionary spending, and they
open a joint account where they both contribute to collective expenses
like rent and utilities. The three separate pots have the advantage of
allowing the couple to ease into cojoining finances at their
In the end,
Marshall says there is no cookie-cutter solution. "Each couple
should discuss what is best for their situation," he stresses,
noting that while cojoining finances is often easier when it comes to
budgeting and bill payments, it isnít for everyone. "Many
couples prefer to keep their finances separate. If they decide that itís
best for the relationship to keep everything separate, then thatís
the answer. If a compromise canít be reached, it may be a good idea
to combine some finances and keep others separate," he says.