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One, two or three checking accounts for couples?

Togetherness makes for a happy relationship, but it shouldn't necessarily extend to your checking account. While some couples can merge their monies in a single joint account, others find ways to manage finances separately, yet interdependently.

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Many financial advisers suggest that while a couple may want a joint account for joint household expenses, such as home mortgage, utility bills, lawn maintenance and so on, each spouse should keep his or her own account.

Perils of a single joint account
Beware of potential problems with a joint account. With such an arrangement, it's easy to make mistakes, particularly in this age of Check 21. The Check Clearing for the 21st Century Act reduces the time it takes for a check to clear by largely eliminating the "float" or grace period between when you write a check and when it gets cashed. So having a joint account with two check writers almost guarantees bounced checks.

"Checks clear so fast today, that if you're both paying bills separately, you won't know your balance and it's a matter of when, not if, checks will bounce," says Pamela Thompson, a CPA in San Dimas, Calif.

In addition, couples often have different ways of handling money, and co-managing a joint checking account can become a "stress point," Thompson says.

She has firsthand knowledge of how different financial styles can affect a couple. Even before she married her husband, another CPA, it became apparent that they had different ways of keeping a checkbook. Thompson was less detail- and more big-picture oriented than her husband. For example, Thompson's husband didn't like how she would roughly estimate her account balance on the fly rather than take the time to balance it exactly every time she opened the checkbook.

Spouses who differ on how to record transactions with a joint account can drive each other nuts. "Since my husband did not like the way I handled my checkbook before we got married, we decided that he could be in charge of our joint checking account," Thompson says. Indeed, designating one person to be in charge of a joint account is one way to eliminate many of the problems that crop up with shared finances.

Even though sharing a joint account can be fraught with peril, Thompson advocates the one-joint-account-per-married-couple form of bookkeeping and bill paying. She says it can work, but it requires a lot of work from both spouses. "Bottom line: If you want to have one checkbook, you must have a system for each spouse to know what checks the other one will be writing, and both spouses need to be involved in the finances," Thompson says.

Separate but equal
Mitch Freedman, a CPA in Sherman Oaks, Calif., points out that separate accounts are advantageous for people living in community-property states such as California. Separate accounts will keep your finances separate. A joint account signals to the divorce court that the money contained in such an account is "community property," which means the monies will be divided evenly, regardless of how much each party contributed. Freedman says that having separate accounts may become important as a potential asset-protection device.

Actual financial arrangements can supersede what's spelled out in a prenuptial agreement. For example, the prenuptial agreement may designate each person's earnings as separate property, but if a couple shares a joint account in a community-property state, the court may decide that the account is community property and won't abide by the prenuptial agreement, Freedman says.

Next: "Thank goodness for overdraft protection."
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