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

Estate Planning and W.C. Fields

One of the hardest things to do for yourself is prepare for your death. As we get older we have to start considering this. Preparing a will or having a lawyer prepare a trust is part of that. But, and I cannot stress this enough, you also need to keep good records.

W.C. Fields (real name:William Claude Dunkenfield) was a comic actor who performed in movies in the 30’s and 40’s. He was extremely popular; a superstar by current standards. Surprisingly, after his death, almost half of W.C. Fields estate could never be located. To ensure his privacy and his access to funds wherever he traveled in Vaudeville, Fields opened hundreds of different bank accounts under assumed names. He did not maintain any records of the deposits or banks, so his executors were probably lucky to locate as many as 48 of the secret accounts. The remaining deposits, estimated to be approx. $600k, were never found. Allowing for inflation, that is $6.7 million in today’s dollars!

As a young vaudeville performer, Fields barely eked out a living. Many years of poverty and near starvation left him with a recurring nightmare: he was alone in a strange city with not a penny to his name and being chased by police. He would awake from these dreams in a cold sweat. This upsetting vision preyed on Fields’ mind, and he began a series of eccentric encounters with banks all over the world.

Terrified of being broke, he would open a bank account under a fictitious name wherever he happened to be. These accounts varied from small sums to as much as $50,000. Fields favored whimsical pseudonyms for his bank books such as Figley E. Whitesides, Sneed Hearn, Ludovic Fishpond, Aristotle Hoop, Dr. Otis Guelpe, and Cholmonley Frampton-Blythe. In time, he began waking up from his nightmares saying to himself. “Forget it, you probably have a bank account in that town.”

Because Fields neglected to keep track of his accounts, only 48 of them were found and closed after he died on Christmas Day, 1946. He had told a friend that he recalled opening at least 700 such accounts.

As an adult, W.C. found fame and fortune, but held on to a lifelong fear that he would go broke. I know that many of us have that same fear. Unfortunately for W.C. Fields, his plan did not work out well for his family. Most of his fortune was likely escheated (taken as abandoned property) by the states where the accounts were held after the legal time period passed where no one claimed the funds. Of course, when he used fictitious names like Aloysius Mergatroid-Hamms, it is not surprising the majority of his estate was never located!

The lesson for us is rather obvious. Proper record keeping and estate planning can be a tremendous comfort to your loved ones. There are many ways to avoid probate and other fees when doing your estate planning. Using a revocable living trust can pass your assets to your family with a minimum of hassle and probate costs. These are also known as Family Trusts. It is important to note that when one establishes one of these types of trusts, they must go to all their financial institutions and change the title of their accounts to the trust with the owners or “trustees” as the signers. The same is true for any properties the family may own. How much can this save you in relation to probate fees and estate taxes? You would need to address this with your attorney. You can set these up online, but you should consult with an attorney to gain a full understanding of the type of trust you need before diving in.

Setting up your savings and checking accounts as Totten Trusts by establishing beneficiaries as part of the opening process is a good idea. A Totten Trust, or payable on death (POD) trust, avoids probate as the beneficiaries are predetermined. When the account holder or holders die, the funds are given to the beneficiaries upon presentation of the official death certificate. If you have money set aside for a special person, child, or grandchild, the Totten Trust is a good vehicle for preserving those funds. Your local credit union can help you establish these types of accounts.

And above all, keep good records. Have them all in one place. Make it easy for your family when you pass away. Set a good example for those following in your footsteps.
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"Auto Financing 101" will be presented at our Main Office on Wednesday, June 19th at 6:30pm. Auto Finance 101 shares the basics of shopping for a car, financing a car, making your deal with the salesman, and how to save money on additional services like extended warranties.

The class takes place at our Main Office at 5615 Chesbro Ave, San Jose CA 95125
Please RSVP with Greg Meyer at gmeyer@meriwest.com.

www.hypersmash.com