For most healthy relationships, as the relationship grows, so do the things you share. Shared interests develop into shared ambitions and eventually a shared address. There also comes the point in every relationship where personal finances enter the equation, and that can add an entirely new dimension to the coupling. But while no two relationships are exactly the same, there are still a few things to consider before taking the fiscal plunge. Read on for the reasons you shouldn't get a joint bank account with your partner, according to experts.
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1 | You live in a community property state.
iStockWhile the rules around certain aspects of personal finance such as federal income tax are the same nationwide, others can depend on your state. This is especially true of places with community property laws in place, which stipulate that all assets and debts acquired as a married couple are owned equally by the two spouses, according to Forbes.
Of course, this becomes a serious consideration if you're very concerned about holding on to your personal gains—especially ones that are passed down.
"For a community property state, one reason to keep separate accounts is based on inherited cash or property from a member of your side of the family," says Jeffrey Stouffer, a certified financial planner and finance expert with JustAnswer. "This can be marked as 'separate property' and keep this from becoming community property."
Maintaining individual accounts can help protect your assets. "This allows the passing of your property to who you see fit without any interference," he adds.
2 | You're unfamiliar with their financial habits.
iStock / PeopleImagesGetting to know the little things about one another is part of every relationship that develops over time. But before you commit to merging your finances, it's best to make sure you're on the same page with your significant other.
"If you do not know how often they pay bills—or if they have certain things in collections—I wouldn't recommend it," Nadia C. Vanderhall, a personal finance expert and founder of The Brands + Bands Strategy Group, tells Best Life. "One person might be a saver, while the other likes to spend. They could be bad with money, and you would think it's a great idea until it's not."
Issues can also go beyond spending habits. "In situations when your partner has debt obligations or poor credit history, having a joint account can affect your ability to secure a loan," says Lyle Solomon, a consumer finance expert and principal attorney at Oak View Law Group.
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3 | You live in a common-law state.
iStockWhile community property states set up couples to evenly split assets accrued during a marriage, it's not the only time when location can affect shared finances. Common-law property states take the opposite stance, determining that property belongs to an individual spouse unless it is specifically put in both of their names, according to Investopedia.
Naturally, this creates a different set of reasons to keep separate bank accounts.
"In a common law state, not having a joint account gives the partner some level of legal shield—especially if a business or venture is owned by one of the members of the couple," says Stouffer. "Any litigation involving this entity will stay with this entity since joint accounts will break this barrier, and an innocent partner can be brought into the situation."
4 | You want to avoid financial stress on your relationship.
iStockNo matter how healthy a relationship is, disagreements can emerge over both little and significant things over time. According to experts, mixing finances could create an entirely new set of issues for a couple to deal with, in some cases.
"Overspending by one spouse could cause a default on fixed monthly expenses, resulting in utilities, mortgage, or rent payments being delayed, causing late fees if expenses are not monitored—and resulting in resentment," says Annette Harris, founder of Harris Financial Coaching. "In addition, if one spouse earns more than the other, the overspending can seem like an unfair distribution of wealth and lead to additional frustration and envy."
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5 | It can be difficult to handle in the event of a breakup.
iStockDeciding to combine funds with your significant other can happen at different points for every couple. And even if you haven't legally married your partner, determining who gets what in the event of a breakup can still be made very difficult by having such an arrangement.
"If your relationship turns bitter, not only will the amount in a joint account be difficult to separate, one partner can even close the account without the consent of the other," warns Solomon. "In such a scenario, you may be left with little to nothing."
Best Life offers the most up-to-date financial information from top experts and the latest news and research, but our content is not meant to be a substitute for professional guidance. When it comes to the money you're spending, saving, or investing, always consult your financial advisor directly.
