When you are married, you and your spouse will have to make a number of financial decisions about how you combine your financial life. For example, you may need to decide if you'll have a joint bank account or if you'll share a credit card.
You'll also have to decide if you should open a joint brokerage account or not. There are pros and cons to sharing an investment account and you should consider both when you make this choice.
If you and your spouse are saving together for a long-term goal, such as early retirement, then it can make sense to have a joint brokerage account to open the door to do that. You can both put money into it, which will help the balance grow faster. You will also be able to track your progress more easily if you are both investing in the same account rather than maintaining multiple separate accounts.
If you are sharing an account, it's also easier to encourage each other to contribute more in service of your shared objectives.
Pro: You can make sure you have a good overall asset allocation
When you invest, you need an appropriate mix of different assets in order to reduce the risk of loss. For example, you don't want to be too heavily invested in one company, or even in one industry or part of the economy. If your money is too concentrated in one particular type of investment, you face an elevated risk of loss.
You also need to make sure you have a good mix of different assets given your age and investing timeline. For example, you don't want to be too heavily invested in stocks if you'll be relying on the invested money soon.
If you and your spouse have different brokerage accounts, it's harder to see if you collectively, as a couple, have the right investment mix. Since you two are a financial team, it's helpful to look at your shared pot of money and check that you have the right asset allocation. If you each have funds in separate accounts, it's easier to miss the fact that you may be over-invested in a particular asset.
Con: You are limited in the types of joint investment accounts you can open together
One big downside of having joint brokerage accounts is that you are limited in what kinds of accounts you can open. For example, you typically cannot open a joint IRA account -- you would each need your own.
So, unless you have a taxable brokerage account with a broker that allows it, having a joint account may not be possible.
Con: You'll have to make investing choices together, which could lead to more conflict
Finally, if your money is pooled in one big account, you'll have to work together to decide how to invest it. This could lead to more conflict, especially if you are each used to investing independently and managing your own money.
Ultimately, you should carefully consider these pros and cons when you decide what's best for your needs. You may decide to have a joint brokerage account and some individual accounts as well, and that can work in the right circ*mstances too.
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FAQs
Joint brokerage accounts can offer couples or groups of investors several advantages: a single investment manager for the account, if desired; combined resources for a larger pool of investment funds; and likely simplified tax and estate planning.
Should I open a joint brokerage account with my spouse? ›
Joint brokerage accounts can offer couples or groups of investors several advantages: a single investment manager for the account, if desired; combined resources for a larger pool of investment funds; and likely simplified tax and estate planning.
Should you combine investment accounts when you get married? ›
A lot of folks ask if they can invest in the same account as their spouse. And while we do recommend combining your finances once you're married, you can't open a joint 401(k) or Roth IRA like you can with a bank account. There is an “i” in IRA—and it stands for “individual.” That doesn't change once you're married.
How many owners can be on a joint brokerage account? ›
Joint tenants with rights of survivorship (JTWROS)1 accounts may be owned by two or more people, each of whom own an equal percentage of assets. If one account holder dies, the whole account is inherited by the remaining owner(s).
What happens to a joint investment account when someone dies? ›
Advantages of joint ownership
Each joint owner holds title to the whole of the asset. On the death of one joint owner, the asset transfers directly to the survivor. The asset doesn't form part of the deceased's estate and, therefore, avoids probate.
Who gets taxed on a joint brokerage account? ›
Either party to a joint tax return can pay all of the taxes. Generally this is the way payments are made, with a check either on one party's bank account or a joint account. The IRS does not care how they get the funds, just so they get them from someone.
Who can withdraw from a joint brokerage account? ›
Each joint accountholder has full control of the account, so either one can sell off all the brokerage assets and withdraw the money. Even in the family context, that happens more often than you'd think, and it can be devastating not just to the two people directly involved but also to other family members.
What is the best way to share finances when married? ›
There are three common approaches when it comes to financial planning as a couple:
- Merge everything together and share all income and expenses. ...
- Create a joint account for shared expenses, while also maintaining separate accounts. ...
- Keep everything separate and split the bills.
However, research from MarketWatch Guide shows that joint banking could lead to fewer arguments and increased relationship satisfaction. According to the study, 55% of couples who use solely joint bank accounts claim they never fight about money, compared to only 39% of partners who have personal accounts.
Can a married couple share a brokerage account? ›
When you open a brokerage account, you need to choose between an individual or joint brokerage account. Joint brokerage accounts are beneficial if you're looking to pool your investments with another person, such as a spouse or family member, and can be a way to simplify investment management and/or estate planning.
What Are the Disadvantages of a Joint Brokerage Account?
- These accounts require a high degree of trust with the other owner(s). ...
- Creditors of one owner can seize all the assets, even if the other owner is not part of the debt. ...
- Capital gains taxes may be triggered as a result of these transfers.
Joint bank accounts
If one dies, all the money will go to the surviving partner without the need for probate or letters of administration. The bank may need the see the death certificate in order to transfer the money to the other joint owner.
Can you have a beneficiary on a joint brokerage account? ›
Accounts ineligible for beneficiaries
For example, we don't allow you to add beneficiaries to joint accounts because joint accounts simply pass to the surviving owner. Below are all the account types that are not eligible for beneficiaries.
Why avoid joint ownership? ›
Problems With Joint Ownership
By jointly owning property, you may find yourself party to a lawsuit if your co-owner is sued or the asset could be lost to a creditor of your co-owner. If your co-owner becomes incapacitated, you could find yourself “owning” the property with the co-owner's guardian or the courts.
What are the pitfalls of joint ownership? ›
Joint property ownership: problems and pitfalls
- Immediate tax consequences on transfer into joint ownership. ...
- Exposure to creditor and matrimonial claims. ...
- Loss of control and co-owner disputes. ...
- Joint owner not only intended owner on death of original owner. ...
- Decisions cannot be made for an incapable joint owner.
As a beneficiary, you may be required to pay taxes on your inherited assets in the future. It depends on the types of accounts you receive and what you do with those accounts. Taxable Accounts (Brokerages/Trusts) – Each year, the income you receive from your investments (e.g., dividends and interest) is taxable to you.
Is it better to have an individual or joint brokerage account? ›
When you open a brokerage account, you need to choose between an individual or joint brokerage account. Joint brokerage accounts are beneficial if you're looking to pool your investments with another person, such as a spouse or family member, and can be a way to simplify investment management and/or estate planning.
Is it better to have one or two brokerage accounts? ›
Traders and investors can maximize their strategies and potentially optimize their portfolio's performance by having an account at more than one brokerage firm.
Is it better to have two brokerage accounts? ›
Multiple Brokerages Help Diversify and Manage Risk
A benefit of owning multiple brokerage accounts is they can help diversify your holdings.
Should couples get a joint account? ›
A joint account demonstrates a level of trust between a couple, playing an important emotional role. A joint account may also mean you can borrow more, as your income and savings are pooled.
