The trend of couples keeping their finances separate is growing as younger generations of Americans marry later in life. Jesica Ray, a certified divorce financial analyst at Brighton Jones, says the decision to combine or separate assets depends on each couple’s unique situation. “Finances are a huge discussion for any couple, particularly newlyweds, and there is no single right answer as to when—or if—to combine them since every couple’s situation is different,” says Ray.
Many advisors advocate for combining assets to build trust and streamline bill payments and budgeting. However, Ray believes that couples should evaluate their financial structures based on personal values rather than cultural or societal norms. “If you value ease, then joint finances might be the right path for you.
If you’re okay with a little complexity, the advantages of keeping assets in your own name helps in the case of protection,” Ray explains. Starting with separate finances while maintaining a joint account for shared expenses can offer protection in cases of divorce, creditor claims, or to qualify for governmental programs later in life. Ray also emphasizes that separate finances can enhance a spouse’s sense of independence, particularly for women building their own wealth.
Choosing separate or joint accounts
Jody D’Agostini, a certified financial planner at Equitable Advisors, also suggests a balanced approach, with mostly joint finances but separate handling of inheritances or significant financial gifts. “The intent from the person granting it to you is to pass it to you for your benefit, not for your spouse,” she says, emphasizing the protection from divorce or financial abuse.
An inheritance should be deposited in an individual account to maintain its separate property status. In most states, inheritances are not considered marital property unless they become commingled with joint assets. Similarly, D’Agostini advises keeping premarital assets separate to simplify matters in case of divorce, which can be facilitated through prenuptial agreements.
Another scenario where separate finances are advisable is in second marriages, especially when either party has children from a previous relationship. Keeping money separate can ensure that the assets each spouse acquired before the marriage go to his or her children after death,” D’Agostini says. She stresses the importance of having an estate plan in place to avoid unintended distribution of assets.
While joint finances can offer simplicity and trust-building benefits, maintaining separate accounts can provide protection and independence. Couples should carefully consider their values, the potential need for asset protection, and family circumstances when deciding whether to combine their financial resources.
