Joint Accounts - Lesbian Couples and Joint Checking/Credit Accounts

Should You Open a Joint Checking or Credit Card Account?

So, you've decided to move in together. Everything seems to be going along smoothly and you want to take the next step in merging your relationship. No, I'm not talking about marriage, rather opening a joint checking or credit card account.

Should You Open a Joint Banking Account?

Handling finances can be tricky in any relationship. Although gays and lesbians don't have all the legal rights of married heterosexual couples, one right we do have is to enter into financial partnerships together. But just because we can, doesn't mean we should. Before you open a joint checking or credit card account, consider the following:

• Does one of you make more than the other?
• Does one of you have more debt than the other?
• Does one of you like to spend, while the other is a saver?
• Can you talk openly and honestly about money with each other, including differences of opinion about spending habits?
• Do you trust your partner?

These differences don't necessarily mean you shouldn't open joint accounts, but they are issues you should be prepared to discuss openly and honestly before you do.

Opening a Joint Checking Account

When you open a joint account, each person is responsible for all of the activity in that account. If one of you overdraws the account, you are both liable. One of you can take all of the money out, without the other's consent or any obligation to repay.

Opening a Joint Credit Card Account

Joint credit card accounts are riskier than joint checking and savings accounts. Either one of you can run up a huge debt that both of you will be responsible for paying back. This can set you back financially and ruin your credit rating.

To Joint or not to Joint?

There are many ways to split expenses when living together and those may or may not include joint accounts.

According to legal advisers Nolo, most gay and lesbian couples handle their finances in one of the following ways:

Marriage Model

Any property that was owned separately before the relationship remains separate, but money and property acquired while together becomes joint property.

Socialist Model

You open a joint account to pay joint bills and each of you contributes based on your earnings. For example, if one of you earns 50% more than the other, she will contribute 50% more to this account.

Partnership Model

You open an account to pay joint bills or to save for something, such as a vacation or house remodel. Aside from this, each of you maintains your own income and expenses.

Totally Separate Model

In this arrangement, you each are responsible for your own income and expenses. When a bill comes, you each contribute to pay for it, much like roommates. You don't have any joint accounts.

If one of you has children there are a whole other set of financial considerations. Will you both be financially responsible for the children? If so, how much? Especially when children are involved, it is important to be clear about the financial expectations of each partner.

No matter what arrangement you have, if you break up, you should close all joint accounts. One partner may seek revenge on the other by running up a huge debt, or she may spend her way out of depression. Before opening a joint account or moving in together, lesbian couples might want to consider drafting a "living together" contract. It sounds unromantic, but if you have concerns about financial obligations, especially if there are children involved, it can make this clear and avoid conflicts down the road. Nolo.com offers downloadable forms for living together and other arrangements.