Love, Money, and Joint Tenants

I can understand why married couples are often opting for separate accounts when it comes to consumer credit such as car loans and credit cards. It is mainly because the errors of one spouse normally don’t have an effect on the other spouse’s credit. If a husband has a late payment, it won’t affect his spouse’s credit. That is until they buy a house. The house is a major purchase in which both parties are deeply involved. This usually takes both incomes to make the purchase, thus both spouses are applying for credit jointly. It is usually at that point that a lot of couples start combining their credit.

But in this modern age, there are couples who are maintaining completely separate finances. There may be a variety of reasons for this. As mentioned above, a spouse may have very bad credit or perhaps even a bankruptcy on their record. The spouse may have problems managing a checking account and has repeated overdrafts or had written checks on non-sufficient funds. Many couples find that the best solution is to have a joint account in addition to each keeping an individual account.

A creditor can be justified in attaching those jointly held funds to pay a debt that only one spouse may have incurred. If a marriage is foundering or if a couple has severe disagreements about how to manage money, they may want to maintain separate accounts. With joint accounts, either party can "clean out" the other simply by withdrawing all the funds in the account.

As for savings, checking, and investment accounts it is wise to hold vesting as Joint Tenants or as a Totten Trust. In the case of a joint account, both parties, or tenants, are each other’s beneficiary. Each one is an owner of the account with equal rights of ownership and transaction.

One might explain Joint Tenancy as: Each tenant owns 100% of the account. Should one owner die, the other has the “right of survivorship” and will take over the funds without probate upon the death of the other joint owner. This is the most common form of account vesting for married couples here in California.

A Totten Trust places a beneficiary or multiple beneficiaries on an account. In the case of the accountholder’s demise, the funds go directly to the beneficiary without having to go through probate. It is a very simple process. In the case of multiple beneficiaries  the funds are divided equally between them. A Totten Trust can be very helpful when a couple is hesitant to have joint accounts for any reason but do wish to leave their assets to each other.

Of course, the difference is that in the Totten Trust the beneficiary has no rights to transact on the account while the accountholder is alive. In a joint account, each joint owner has equal rights to transact on the account.

If you have a complex estate or have multiple beneficiaries, it may be helpful for you to have a Family Trust or what is also known as a Revocable Living Trust. These types of trusts allow you to have very detailed instructions on how your estate is distributed. For more information on Living Trusts, please contact an attorney who specializes in family and trust law.

Love is good but it does not pay the bills or pay them on time, nor is love a good retirement planner. Sometimes love has to take a back seat to the realities of financial acumen and management. Today more than ever, your choice of a spouse can make a difference in the way you approach your finances. A spouse with poor credit and poor money skills who lack savings or a 401k could create an uphill battle for spouses who are good at money management. Let’s keep in mind that 70% of all marital arguments are about money! Ouch! Money is often cited as the cause of divorce.

One thing I have heard that is encouraging: If nearly 50% of marriages end in divorce, then over 50% last forever! That’s a stat I can live with.

Financial questions to ask before getting married

Questions you might ask yourself prior to making this financial decision:

• Do I want a joint account with this person?
• Do I trust this person to communicate with me about our spending plan?
• How did his/her parents manage money?
• How well does this person manage money?
• Does this person take risks with their investment money or are they conservative? Has this person had a big loss due to a poor investment decision?
• Will you pay the bills together or is one person to be responsible for them? Which way are you most comfortable?

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FREE Financial Education Class JUST for Teens

Teens: Learn what it's like to be on your own in the Real World.

Whether you're starting high school or about to graduate from college, learn the necessary skills to start making smart money decisions.

Teenagers learn about the real world of
living on their own!

Real World Budgeting
Wednesday, February 19, 2014
6:30-7:30 p.m.

Meriwest Credit Union
Chesbro Financial Center
5615 Chesbro Avenue
San Jose, CA 95123

Attend this FREE, fun and interactive class made just for teens! Various life scenarios involving everyday finances are covered:

• Learn how to make wise money decisions when starting an "adult life".
• Learn tips and find out the steps on how to rent that first apartment.
• Learn the best tricks for making ends meet when you are on your own.
• Find the hidden costs of being on your own.
• Learn how saving money can improve your lifestyle.
• Learn how your down payment on your first car can effect your payment and interest rate.

Teens, learn what it's like to be on your own in the real world!

Parents are also welcome to attend.

RSVP today to Greg Meyer, Community Relations Manager - gmeyer@meriwest.com or call (408) 365-6328

Happy Valentine's Day! Save your Money!

On Valentine’s Day, we tend to spend money on our significant others. Like many holidays, it is conspicuous for its spending. We buy flowers, jewelry, chocolates, and meals all in the hopes that he or she will be our Valentine. They say you have to “Spend money to make money.” I wish there were an easy rhyme that goes along with spending money for your Valentine’s date! How about “Spend money to get a Honey?”  

A dozen roses can cost from $40 to over one hundred depending on where you get them. Today, many restaurants are advertising special deals for Valentine's Day. Several are advertising $150 complete four course meals for two. Maybe I'm cheap, but for $150 they should change the oil in my car, too!

Couples do a lot of things together; they dance, they dine, and they drink just to name a few. But one of the most significant things they can do for themselves is save money. There was an old saying that “Two can live as cheaply as one.” For obvious reasons we know that is not true, but two can live together cheaper than two living apart. What do I mean? The sharing of Expenses.

When we get married or decide to share our home with someone, we can realize some significant savings in our expenses. By combining our budgets, we can find ourselves with a lot of extra cash. We share rent with someone. We also share our utility bills such as cable and electricity. Buying our ingredients and cooking most of our meals at home rather than eating out can almost make it seem as if two can eat as cheaply as one. The challenge is to take the savings amount of each of these categories and invest it in a savings or money market account. Couples need to have commitment, discipline and focus to do this.

Spare change is always good. We might have a savings plan and budget our spending, but there is always spare change in our pockets. Save that change and turn it in annually for a nice savings surprise. I average $250 annually in accumulated coins from my pocket. I have been told that is low!

These are adhoc methods of saving. The best way is to have a plan and a goal for your dollars. A simple goal of $50 in savings deposited each month at a savings interest rate of 3.5% can turn into $3,282 in five years! (Rates are low now, but with inflation, they will be going up in the future.)

Do we need two cars? Selling one car can save you a payment, insurance, gas, maintenance and repairs on it. Get a monthly fast pass for the local metro and bank the rest!

But there are also a lot of compelling reasons to save:

Young couples typically get invited to other couples’ weddings and showers with gift obligations. Savings can offset some of the expense of this compulsory gift giving.

Appliances break! Hair dryers, curling irons, razors, microwaves, toasters, blenders, mixers, etc can break and need replacement. How many women can go without a hair dryer or curling iron for even a day? How many men can go without a coffee maker or microwave? These are expensive to replace and can be trouble for your monthly budget. Save money for their replacement. 

Cars breakdown. Tires go flat, hoses leak, batteries go dead, and belts break. A broken transmission can cost you over $1,500! Just owning a car is a good reason to save. 

Is there someone the couple loves who lives far away? A grandparent, parent, or other favorite relative? Suppose that relative became gravely ill? Would they want to see them? Emergency travel is another good reason we save! Considering the expense of traveling, this may only be possible thru savings. (or the dread use of credit).

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Our next financial workshop is for teens: Reality Based Budgets - The Post College Simulation
February 20th at 6:30 PM at our Main Office 
Meriwest Credit Union
5615 Chesbro Ave
San Jose CA 95123

Please contact gmeyer@meriwest.com to RSVP for the workshop.

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