It’s time again to dip into the mail bag and answer some long awaited reader questions. If you have a personal finance question, feel free to contact me and I’ll do the best that I can to find an answer.
This weeks question comes from “P”, who is newly married and is wondering how to structure the finances between the newly formed partnership. Here was the question:
Can you post about advice you would give to someone who is newly married (or about to be) about joining assest and savings? whether to keep separate accounts or joint accounts, etc.
I’ve done some research into this topic before I got married in 2005 and it seems as though keeping your finances separate may be the best bet for taxation and tracking purposes.
The strategy is for the higher income earner to pay for all the expenses, while the lower income earner does the investing. The reason being is that investment gains are taxed in the hands of the person that funded the account. Thus, it would be best to attribute this money back to the spouse in the lower tax bracket for tax optimization.
When tax season comes along, CRA will expect there to be a paper trail for where the investment money originated from. This is where having separate accounts can be helpful, especially if you are audited. :)
Anyone have anything to add?
Note that I’m not a financial planner or tax expert so please do you own due diligence. My advice above is based on my own experience.