In order to have a joint bank account, one necessarily does not have to be married. These accounts can be opened by family members, couples before marriage, and even strangers. No relationship is essentially required for having a joint account.
How to Merge a Bank Account After Marriage?
According to a recent study, it has been found that 21 percent of divorced adults consider money as their primary reason for separation. But with a well-planned financial goal and honest communication, both partners can manage their finances on their own in a planned way and work as a team.
Here are some discussions that will help you to know why and how to merge bank accounts after marriage. But before that, let’s know what a merged bank account is.
What Is a Merged Bank Account?
A merged or joint bank account is an account that is shared with your spouse or any other family member for pooling your money together. This helps in budgeting together as a couple, as both partners have visibility on their accounts. It usually allows both partners access to the funds.
These joint accounts operate much like normal accounts, but it needs two or more registered users for opening a joint account. A joint account also includes bank deposit accounts like checking and savings accounts, credit cards, as well as other financial products which include loans and credit lines (LOC), mortgages, and so on.
Thus, a joint or merged account provides both partners full authority to utilise the funds the account holds, but both account holders are also liable to pay any charges, fees, or expenses included.
What Are the Things to Consider Before Merging an Account?
If you are planning on how to merge bank accounts after marriage, you should take your time to rethink this matter. Then decide whether you are comfortable merging your account with your spouse or not.
Here are some things that you should necessarily consider:
Your Partner’s Debt: Before combining your finances, it is significant to consider whether you or your partner has debts. You must have a clear understanding of the financial responsibility that you will be taking up because if your partner has debts, they might become yours.
So, be in open and honest conversation with your partner before moving all your savings into a joint account with your partner.
Your Partner’s Attitude Towards Money: Before combining your finances, it is worth considering the spending style of your partner. Some people love preserving their cash to grow their bank balance, while others love to spend cash for luxurious requirements.
So, ensure that your partner has a synonymous approach towards money management as yours, otherwise, there will be controversies in your relationship.
In Case of Breakup: Merging your account is one of the most crucial financial decisions that one makes, so it is worth considering any unlikely circumstances. What will happen if your relationship fails? If you have guaranteed someone’s loan then if the relationship ends, it could have a massive outcome.
Also, if you have signed any finance agreements together, or taken any loan or credit card together, then whether you both are together or not doesn’t matter. You are liable to pay the bills without failure; otherwise, it would affect your credit score and make it difficult to borrow money in the future.
Assets You Possess: Another important consideration while combining bank accounts after marriage is the assets that you and your partner own, especially business or property assets. As per the property (Relationships) Act 1976, even de facto couples living together for three years hold the same status as those married or in a civil union.
So, if you divorce or break up in between, the assets will be split evenly across both partners, until and unless you make a legal agreement to keep them separate.
Get Proper Advice from Lawyer: Fortunately, there are some ways through which you can protect your finances even during a controversial moment. You can always consult your relationship property lawyer for any sort of legal advice. They will provide you with some fantastic options to protect your finance in case of divorce or break-up.
The more you will able to get to know about these ways, the easier it will be for you to ascertain should married couples share bank accounts or not.
What Are the Steps for Merging Accounts?
Putting all your finances together and managing them in an effective way is a big and crucial step in a marriage relationship. So, you can start and proceed with these steps to know how to combine bank accounts after marriage.
Step 1: Talk to Your Partner About Finances Honestly
Start with discussing your financial situation with your partner by every honest means. Also, discuss your assets (investment, property, bank account) and debts (credit card balances, student loans), etc. with them.
Step 2: Open a Joint Account Together
After you have discussed finances with your partner, it’s time to open a joint account with your partner in a bank of your choice. This will help you both gain transparency in maintaining your account as you can track your partner’s expenses as and when you want.
Step 3: Work and Save With Your Partner Together
Now, you both can earn income and transfer some decided amount to this joint account. Thus, you both can save together and create a budget. Accordingly, you can also manage your spending habits as well.
Following these steps will help you in combining bank accounts after marriage.
What Are the Details Needed for Merging Accounts?
You can sign up for a joint account at your nearest branch or even you can apply for it online as well.
Here are some documents that are essentially required for opening a joint account in a bank:
- A fully-filled joint account application form
- Client Agreement
- Verification of both partners holding joint accounts together. It includes the following:
Any one valid ID (Passport, Driving license, National ID card)
Ensure providing a copy of the document that clearly shows: your photo, signature, name, date, and place of birth, nationality, issue/expiry date, or serial number.
Any one recent document that verifies your present address (Bank statement, Residence certificate, Utility bills such as electricity bill, water bill, or phone bill)
(Ensure these documents are only valid if issued within the last 3 months)
What Are the Pros and Cons of Merging Bank Accounts?
Should you have a joint account with your spouse? If you are still confused, go through the below section to know about the pros and cons of a joint account:
It offers accountability and financial transparency for couples
It heightens the possibility of misunderstandings and disagreements regarding how to spend money
It simplifies your bill payments and other financial obligations
Expenditures made are not simplified enough
Maintaining a budget as a couple becomes easier
Escaping financial abuse makes it much more complicated
It encourages a sharing mindset for couples
It also allows mismanagement of money because of unreliable partner
There is a lesser chance of financial shock as both account holders know the expenses and balance remaining.
High risk involved which might give you a financial shock for which you are unprepared.
So, opening a joint account can be beneficial as well as riskier for you and your partner.
Thus, in a marriage relationship, managing money together is a crucial step. So, if you want to proceed with a joint account together and want to know how to merge bank accounts after marriage, then this guide will help you with this along with its advantages and disadvantages. Take your decision wisely before proceeding!
FAQs About Merging Bank Account After Marriage
When a joint account holder dies, then in absence of a clause like L or S, E or S, or F or S, then the balance can be paid jointly to the legal heirs of the deceased and the survivors. For instance, if an account is in the joint name of A and B, then if A dies, then the remaining amount will not be paid to B alone.
In general, the IRS can levy a joint bank account if one bank account holder has a delinquent tax debt and all other required procedures have been followed. This is true whether the joint account holder is your spouse, relative, or anyone else.
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