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What’s the ideal way to handle your money?

In a perfect world, married couples merge their lives as well as their finances, and have joint accounts. However, sometimes a couple can be connected at the heart but have separate bank accounts. While partners should look at their overall assets together, depending on the circumstances, sometimes having separate accounts is more appropriate.

A second marriage

Most people enter second marriages with financial baggage from their first marriage. Either partner may be supporting children, or may have debts incurred by the cost of a divorce. This creates a delicate situation, balancing the financial needs of merged families. To resolve issues such as making sure that children from the first marriage are supported or that one spouse is not responsible for the other spouse’s debts, separate accounts may be a wise idea. It creates clarity and makes sure that each side is discharging his/her financial obligations. There is also the option of keeping some accounts separate and having a joint account for mutual household needs.

Should both names be on your U.S. brokerage accounts?

Similarly, with regard to U.S. brokerage accounts, in the situation of a second marriage both partners may consider having an individual account or an account that is called “joint tenants with right to survivorship.” For retirement accounts, anyone who is concerned about the rights of children from a first marriage may want to name specific beneficiaries, as well as contingent beneficiaries who would receive the money upon their death. It’s important to review these different possibilities when opening an account because once it is set up, changing account titles is cumbersome and may have tax implications.

If you or your spouse have financial baggage, it is crucial to make sure your financial planning identifies the various issues involved and is set up properly. If you have questions whether your investment accounts should be held jointly or separately from your spouse, it’s time for an open conversation with both your spouse and financial advisor.

For more about money and marriage, click 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 April 4, 2016.

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