Husband and Wife maintaining one joint account

I was servicing a couple on their financial planning matters, the husband asked me an unusual question: "Allen, me and my wife maintain one joint (cash) account. Is that sound?"

Being a married man myself, I must commend the courage of this man by just having a single joint account and put every cents of his pay cheque into this account faithfully every month. Sincerely, this is a commendable act of love, faith and trust.

From the financial planning point of view, there are some risks associated with such strategy.

1. One must ensure that the credit behaviour of both parties are good.

If either one of the joint account holders has credit or liabilities problems, the entire joint account can be exposed to creditor's claim. Liabilities can come not only from high consumption spending, but also from guarantor obligation and civil law suit.

2. Treatment as estate

If either one of the joint account holders dies. At least 50% of the joint account assets will be treated as estate of the deceased account holder. The bank has the right to freeze this account until the probate is cleared. This will present some practical problems for the surviving account holder

a. All GIRO linked to this account will be terminated.

b. Lawful creditors can lay claim onto this estate to recover their bills. For example, IRAS for income tax and estate duty; banks for outstanding credit card bills, mortgage and car loan etc; hospital for last medical expense prior to death of the account holder.

c. Surviving spouse might face liquidity problem as the account is (could be) frozen until the probate is cleared.

Therefore, one has to periodically review above risks and its financial impact to his/her family if both husband and wife maintain just ONE single bank joint account.

And for any man who chooses this strategy, you better love the woman you marry!