Yours, mine and ours

Written by 'Nimi Akinkugbe

As two individuals merge all their worldly goods, there are many things to consider. After the excitement of the wedding ceremonies, it is time to face your financial future together. Have you effected your name change on your documents? Will you have joint or separate accounts? How will you manage your investments? Have you updated your insurance policies to reflect your new beneficiary?

Should you decide to adopt your spouse's name, take time to update your records; change your name on your drivers' licence to your share certificates, your Will and other legal documents. Notify your employer, creditors, insurance agents and bankers, who will need to see your certified marriage certificate as a legal proof of your new status before any changes can be effected.

If you and your spouse work and are covered by separate health plans through your jobs, compare the two plans as you may find that it might work out cheaper to have one family plan instead of two individual ones. This is a good time to discuss life insurance; when you are single and without dependants this will not be a priority, but in marriage, and certainly where one party is the primary breadwinner, a life insurance policy is appropriate as a sudden loss of income can be devastating to a young family.

Many people don't discover the extent of their spouse's financial obligations until they are married. Debt brought into marriage can be a major source of strife if not well handled. While you are not legally responsible for the credit-card debt or other loans opened in your spouse's name, it could affect your eligibility for joint loans such as a mortgage. Even if the debt may have been incurred before the marriage or afterwards, try to deal with the debt together and seek to bring it under control.

You may prefer to maintain a certain degree of independence by keeping separate accounts for personal spending. If your partner is a spendthrift or quite extravagant, while you are a saver or you just prefer to spend your money without your partner scrutinising the minutest detail, separate accounts may be more appropriate.

Parties to a joint account have a right to withdraw all the money in the account. It is for this reason that the use of joint accounts is usually limited to people who have built a solid level of trust; generally close family members, partners, parents and children. For example, an elderly parent may open a joint account with an adult child to pay household bills or to avoid the complicated probate court process in the event of their demise. A parent may also opt to maintain a joint account with a child to provide immediate access to funds should the need arise.

Having a joint account combined with individual accounts for personal expenses is a good compromise as each partner takes some responsibility for the household budget, yet is still able to retain some autonomy. Partners contribute a certain amount of their monthly salary into the joint account to cover routine household expenses such as food, utility bills and larger expenses such as rent or mortgage payments, school fees and family vacations. If you earn significantly more or less than your spouse, it is only fair to contribute amounts in proportion to your respective incomes to reflect this imbalance.

There is sometimes confusion about the difference between a joint account holder and an authorised signatory. Creditors view a joint account as they would an individual account, this means that each account holder is financially liable, and of course either party can withdraw at will.

It is important to note that while an authorised signatory is able to operate the account, the main account holder can choose to remove or change their access at any stage. If the main account holder dies, the other signatory to the account would cease to have access to any money because the account would form part of the deceased estate.

It may seem absurd to be discussing your estate plan at this stage of your life, but you need to update the beneficiary designations on your employers' "next of kin" form, bank accounts, retirement savings account, insurance policies and your Will. This is doubly important where this is not your first marriage.

One advantage of a joint account with the "right of survivorship" is that if one of two joint account holders dies, the surviving account holder is entitled to the account. Assets such as bank accounts, brokerage accounts and property titled in both your names will usually pass to your spouse without going through the probate process. It is important to consider these issues so that your assets will be divided the way you want should something happen to one or both of you. Seek legal advice as to the best way to title your accounts and other property.

There is no one size that fits all when it comes to finances in relationships but with a careful planning and clear communication you can avoid many frustrating conversations. Even the best system is not always appropriate, so be prepared to modify your system as your relationship and financial situation evolve; if one option doesn't work, try another. The financial decisions that you make now can have a lasting impact on your financial future as you go through the various stages of life.