What’s the best way to invest with your spouse? Should you have a shared savings account or separate accounts?
Whenever I help a couple set up U.S.-based brokerage and investment accounts, I ask whether they want a “joint” account, or whether they want to keep their money separate.
Shouldn’t couples always invest together?
In an ideal world, spouses would combine both their personal and their financial affairs. But given the complexities of today’s family structure, one account type doesn’t meet everyone’s needs. Some couples enter matrimony on equal financial footing, while others have children from previous marriages, and debts from the past. Before deciding on the structure of the account, therefore, consider each party’s assets, obligations, and needs. Money should not become a power tool in a marriage.
Benefits of a joint account
A joint account often makes sense as either owner can give trade orders in a joint brokerage account and write checks to withdraw money. On the other hand, bank-to-bank wire transfers require both signatories on the account to sign. In the event that one party dies, there is paperwork that the surviving spouse must sign before accessing the money. Depending on how quickly the forms are filed, and how fast a proper “release” comes, it could take quite some time before the money becomes available. A good trick, therefore, is to make sure that each spouse has access to enough funds to pay the bills for several months in the event that the joint account gets frozen.
Should second marriages set up a joint account?
Consider important factors like prenuptial agreements and the need for financial independence (which doesn’t mean financial secrets) when deciding whether to combine funds in a second marriage. Many times, spouses agree to each keep a separate account for personal investing but also a shared account for household expenses. If you’re in this situation, listen to a financial podcast on the topic of shared savings accounts here.
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published August 30, 2016.