How do couples manage assets?

[Dee_the_third]

Hubby and I were trucking along in accumulation phase, but we're getting a sudden windfall that puts in within spitting distance of leanFI.

First of all, it's a weird mental transition, to suddenly realize that financial considerations are suddenly of second importance.

But the real question is a practical one, here. We hold assets at about a 2/3 1/3 split in our individual names only. Last summer after we had our son we set up a living will to avoid probate in case of untimely deaths, but how do we manage this while we're both alive and kicking?

Do you guys like have a quarterly financial meeting where you look at each other's accounts and rebalance as necessary? Do you have each others' logins?

[secondcor521]

If you're married, it doesn't matter much.  As long as you're together, you can use assets from any account for any expense.  If you divorce for whatever reason, the court will split everything 50/50 and there are mechanisms, generally tax-free, for transfers to effect that equal division.

When one of you dies, generally people set up their estate so it goes to the spouse, and generally there are no taxes due at that point either.

The only thing that really matters that I can think of is your individual RMDs are based on your individual traditional IRA balances.  No need to balance them out (and you can't anyway); just keep that in mind when you do RMD / long term tax planning.

[Metalcat]

Every couple is different.

We consider all assets pooled, no matter what account they are in. We have access to all of each other's accounts, and no financial decision is made without being collective. We talk about money almost daily, if either of us has a thought about money, we just say it out loud.

I'm generally in charge of any big thinking with money, because DH is not great with understanding how different accounts work or why I would move money to different places. But I explain the intended outcome and the risks of each decision in ways that resonate with him, so he has a very good understanding of the "why" even if he doesn't really get or care about the "how" of asset allocations and taxes.

We talk constantly about money because all decisions, plans, hopes and dreams have a financial basis to them, so we keep that transparent in the conversation as opposed to talking about things without acknowledging the financial underpinning the way most people do.

Example: if we talk about taking a vacation, we'll not just outline what it costs, we'll talk about that cost impact on our savings, and what the long-term opportunity cost impact would be of taking an annual trip of the same cost.

That's literally the only way we really know how to quantify anything. Most people can only quantify things in terms of monthly payments, but we're the opposite, we can only fully grasp what something costs in terms of long term impact on savings. So that's how we talk about everything.

[reeshau]

Our finances are comingled, but retirement accounts, of course, are in individual names.  We have tracked everything in Quicken for our entire 27 year marriage, a habit my wife picked up from her parents, brought to the relationship, and taught me.  All assets are shown there, as is the budget, so either of us can check up any time we want.

I manage our investments, so I have all ID information.  But DW chose her passwords, so those will feel "natural" to her.  A full list is in our safe.

We budget together annually, which is a pretty boring, brief exercise unless significant life changes happen.  (Admittedly, that has been true each of the last four years.  I think we will be back to boring in 2023)  During the year, we also talk specifically at the time we commit on large expenses--making reservations for a big trip, or ready to buy a big expense.

[Catbert]

If the "sudden windfall" was an official inheritance, whichever of you inherited should keep it separate.  That doesn't mean it shouldn't be considered in your overall asset allocation or even spent jointly by transferring money to a joint account for use.  But just in case, it should be held separately and not co-mingled.

I believe every state in the US treats inheritance as "separate property" in a divorce situation if it hasn't been co-mingled.  Certainly my community property state allows you count it as separate property.

[Sandi_k]

We have a yours, mine and ours account for monthly spending and saving.

Legally - they are all joint. So DH has a checking and savings at Wells Fargo, so that is what he uses for ATM cash, and bill pay for his specific, individual hobbies. I am joint on it, but I rarely look at any info on it.

My account has my monthly paycheck auto-deposited, and that is the account I use for my personal bills and hobbies. Investment funds are auto-withdrawn from my gross paycheck, as is a calculated amount of withholding for Fed and state taxes.

We both transfer a proportional amount to the "ours" account for joint bills: housing, utilities, pet expenses, insurance.

DH did have an inheritance from his grandparents ~ 10 years ago, and I urged him to open a separate account. So he did, with a POD designation. He uses that account for his flying hobby, including buying a plane in 2011. He uses those funds now for gas and hangar rental.

When we retire, our income will be about 80% my pension and investments, and 20% his. But he's likely to get a much larger inheritance that I will, and that will be used for home renovations and other joint "bucket list" purchases.

[PDXTabs]

If you're married, it doesn't matter much.  As long as you're together, you can use assets from any account for any expense.  If you divorce for whatever reason, the court will split everything 50/50 and there are mechanisms, generally tax-free, for transfers to effect that equal division.

This is sort of true some of the time. But even in the community property state of California inheritances generally stay separate. But I'm not a lawyer and this isn't legal advice.

[secondcor521]

If you're married, it doesn't matter much.  As long as you're together, you can use assets from any account for any expense.  If you divorce for whatever reason, the court will split everything 50/50 and there are mechanisms, generally tax-free, for transfers to effect that equal division.

This is sort of true some of the time. But even in the community property state of California inheritances generally stay separate. But I'm not a lawyer and this isn't legal advice.

Ah, yes, good addition.  I was thinking just in terms of the OP's and their spouse's assets.  Many (most?) states treat inheritances as separate property unless comingled.

[PDXTabs]

If you're married, it doesn't matter much.  As long as you're together, you can use assets from any account for any expense.  If you divorce for whatever reason, the court will split everything 50/50 and there are mechanisms, generally tax-free, for transfers to effect that equal division.

This is sort of true some of the time. But even in the community property state of California inheritances generally stay separate. But I'm not a lawyer and this isn't legal advice.

Ah, yes, good addition.  I was thinking just in terms of the OP's and their spouse's assets.  Many (most?) states treat inheritances as separate property unless comingled.

Yes, but also it is AFAIK the joint gains that are shared in a community property state. If you get married with $1.0M and divorced with $2.0M
 you are only going to argue about the $1.0M worth of gains. I believe that this is called "tracing."

But to make things more complicated not every state is community property and many/most have laws about "equitable" distributions. You might well find that in your state they are reluctant to commingle separate accounts for example in a short marriage between two white collar professionals who never had kids and instead decide that keeping their account separate is more "equitable" through some definition of equitable that I'm not very well versed in.

This is one of the reasons that I'm a huge proponent of premarital agreements. Otherwise you quite literally don't know what some judge will do at some later point in time if you can't come to an amicable resolution. But again, I'm not a lawyer and this is not legal advice.

[Zikoris]

We have separate finances, but I manage everything. He has access but doesn't really log in much, and basically just trusts me to take care of all things financial - which is fine, because I've always done a good job of it, and it's very low effort for me.

We don't really discuss money much, other than I make us cookies when we reach various milestones. There's just nothing TO discuss, because it's all been automated and mostly unchanging for the last decade. I don't even know what all these couples with monthly meetings are talking about.

Actually, we did talk about money last night for the first time in awhile - it was very short. I wanted to go scorched-earth on spending for six to eight months to expedite FIRE due to some work stuff. I laid out what that meant specifically in terms of what I wanted to cut. He said okay and that was it. Like five minutes.

[TheFrenchCat]

My DH and I just use a joint bank account, so my experience is probably very different from yours.  For us it works to treat all money as "ours," and we do this even with money that legally isn't both of ours, like our premarital assets, since we're in an equitable division state.  We also share passwords to accounts that are in one name or the other.  I think this works easier for us, especially since I've given up working more to do more of the childcare (our daughter didn't go to daycare), and he's done more of the money earning.  I don't know how we'd manage split accounts, though I'm sure some couples in our situation have done that. 

We don't have regular money meetings, but we do consult each other if we're going to spend on something out of the ordinary.  And we do have occasional discussions about plans for money and retirement, mostly inspired by this site/forum, because I like talking about money. 

I'm not a lawyer, but I'd definitely take a look to see what the laws are in your state.  If something goes wrong, you don't want to be surprised that the way you've divided your assets isn't how the law will divide them. 

Also, consider the source of the windfall.  If you're in an equitable division state, if the windfall is an inheritance or gift just to your husband, then I don't think it would be split in case of divorce, I think it'd just be his.  Again, not a lawyer, so not legal advice, but something to think about. 

[GuitarStv]

We've pooled all assets since getting married, but we also were both completely broke when we met.  We share the same accounts and credit cards.  We do a quick check on investments once a year when it's time to rebalance, but don't really discuss money otherwise - same page financially, so we're working to the same goals.

[ixtap]

We have separate finances, but I manage everything. He has access but doesn't really log in much, and basically just trusts me to take care of all things financial - which is fine, because I've always done a good job of it, and it's very low effort for me.

We don't really discuss money much, other than I make us cookies when we reach various milestones. There's just nothing TO discuss, because it's all been automated and mostly unchanging for the last decade. I don't even know what all these couples with monthly meetings are talking about.

Actually, we did talk about money last night for the first time in awhile - it was very short. I wanted to go scorched-earth on spending for six to eight months to expedite FIRE due to some work stuff. I laid out what that meant specifically in terms of what I wanted to cut. He said okay and that was it. Like five minutes.

We have a similar system, but talk about it more. Thanks for the reminder that I wanted to let him know that I am thinking of upping the MBR contributions.

[Dee_the_third]

Thanks all. Some good advice in this thread.

Hubs & I have always been on the same page financially, but I guess the heart of my question was how the mechanics changes once you're out of the accumulation phase.

We had a pretty good system going, and we have the same philosophy, so it was easy. 50% off the top of our respective paychecks into a tax-deferred account, the rest into shared checking which covers the day to day and occasional lump sum. Once in a while something big comes up (an investment property, a baby, graduate school, funding the IRA) and we handle the cash flow for those on a case-by-case basis. Since those kinds of changes require a family meeting anyways, the finances were naturally discussed.

I've accumulated a lot more than him in my tax-deferred accounts, just because my industry pays more.

Realistically neither of us is going to stop working anytime soon, windfall notwithstanding (it is an inheritance). So it not a question we need an answer to right now. But eventually what does it look like? One person manages the assets across all accounts? How frequently are withdrawals made? (monthly? quarterly?) The RMD point is a good one.

[Metalcat]

I'm not sure if understand your question.

If you talk openly about your finances, then why not just talk through how you want to handle your finances in retirement?

There is no right way, just the way that will work for you as a couple.

What you seen to be asking is just the logistics of withdrawals. It could be done by one person, it could be done by both of you together, it could be done by both of you separately managing separate accounts.

Do whatever you think will work for you. What's more important is how you make the decisions, not the logistics of exactly who types in the numbers on the computer to move the money around.

Maybe I'm missing something in your question??

[Dee_the_third]

Sorry Mal. It's not a question anymore, I'm really just talking to myself (on a public forum) :p

Thanks for the input everyone. Appreciated seeing how everyone else does it.

[FLBiker]

I manage everything, and I have logins for my, our, and her accounts.  I rebalance across all of them holistically.  Money stuff (investing, churning credit cards, drawdown models) stresses DW out.  We talk about it, but only in very high level terms -- she knows our general investment philosophy (low-cost index funds, 90/10 stocks to bonds) and the knows that we're at our FI number, but she doesn't want to talk about details.  I've recommended a good fee-only planner (that will handle the management as well) for if I die or become incompetent.

I used to talk about stuff with her a lot and try to teach her stuff, but she really doesn't enjoy it.  For folks like her, I feel like a planner is a reasonable thing.  And I really appreciate that she lets me do all this stuff (max out our 403bs, travel hack in both our names, etc.) even though she doesn't want to be involved.

[use2betrix]

We have combined everything. Some investment accts are in my name since they were opened before we were married. She has access to everything. I do all the financial things, while she manages our categorizing the budget through personal capital.