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Joint or separate accounts for couples?

Marriage and Money - Planning Your New Financial Life Together

When Jordan Chittley and his soon-to-be wife decided to move in together just over a year ago, they agreed to combine more than their cutlery and closet space. They also decided to merge money, setting up a joint bank account.

“It was my fiancé’s idea, but I was in support of it right away,” Chittley says. “I think it’s a lot easier not to have to worry about who’s paying for this and who’s paying for that. We know couples who keep it all separate, but it seems like it would be a lot of work. I prefer the way we’re doing it. At the end of the month, money comes out for rent and bills, and there’s no question about who paid for what or having to figure it all out with separate accounts.”

Whether tying the knot or living common-law, couples inevitably face the same question: should they get a joint account, keep their finances separate or come up with some combination of both?

Communication is key

It was an easy decision for Chittley, a Toronto editor, and his partner, who is a lawyer.

“We both come from families that were very open talking about finances, and that was something that was easy to talk about even when we first started dating,” he says. “It was easy to get into the groove of things.”

Investors Group financial consultant Kjeryn E. Davis says that having that kind of open dialogue is crucial when it comes to couples merging finances.

Money is right up there when it comes to things couples argue about,” says Davis, who’s based in Camrose, Alta. “It’s so important to have good communication right from the start, especially if one person’s a saver and the other one’s a spender.”

What is your comfort level?

Davis notes that joint accounts are most common among younger couples getting married or moving in together for the first time.

“We see this less and less in second, third, and fourth marriages,” Davis says. “The guards are up, especially when you’re dealing with wills and kids. It’s not ‘Oh, we’re going to be together forever.’”

When deciding whether to share bank accounts, Davis says the first step is being certain that you feel comfortable with the idea.

“Essentially, you’re setting up a trust account, and if you don’t have trust, that’s a big problem,” she says. “You have to look at it realistically, not romantically. If one person’s pushing for it but the other is not comfortable with it, don’t do it.”

Pros and cons

An advantage of merging accounts is cutting back on monthly bank fees (although you can always opt for no-fee banking) and fees for money transfers. Another plus? If one spouse dies, the other still has immediate and easy access to funds through right of survivorship. Individual accounts, by contrast, may be subject to probate court restrictions, which can keep money out of the hands of survivors for months if not years.

But a joint account also means joint liability: if one person dips into overdraft, you’re both responsible for repaying it. Then there are those unfortunate situations where one half of the couple drains the bank account and splits town.

Say you do set up that shared account. Be sure to clarify details on signing authority, Davis suggests. Will either one of you be able to sign a cheque or will both of you be required to?

A shared bank account tends to work well in situations where one spouse is working while the other isn’t earning an income — say they’re going to school or staying at home to take care of the kids: “You don’t want to feel as if you’re getting an allowance or getting paid,” Davis notes.

Her advice is to consider a hybrid: having a shared account for expenses while maintaining individual accounts. “It’s pretty hard to surprise someone with a big gift if you share everything.”

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