Question: I have heard that expat couples should always have joint accounts here in the UAE — what are the advantages of having a joint account? Also, can both spouses have their salaries transferred to the joint account? And do you advise having another single account, as well as a joint one?
Answer: Marriage is an event that often prompts us to re-evaluate our finances and one of the fairly immediate decisions to be considered is whether to move to a joint bank account, or to remain with separate accounts.
Let's look first at some of the advantages of a joint account. The more bank accounts you have the harder it is to keep track of your finances. Having a single joint account makes managing your money, paying bills, and budgeting easier.
A joint account is also transparent, with most banks happy to accommodate a salary transfer to a joint account. This means both parties can monitor the account to ensure their combined income or savings are being spent sensibly. Operating a joint account can also be cheaper than running two separate accounts, particularly if by combining income the account remains in credit, and the use of an overdraft facility is avoided.
However, there are also disadvantages. For example, by gaining transparency you could lose out on privacy. Not everyone likes the idea of their partner being able to view all the details of how they spend their money, or that either party can overspend without the permission of the other.
But the biggest disadvantage is that if one of the account holders of a UAE joint account dies, the bank account is frozen until the deceased account holder's estate has been probated. This can take upwards of six months to resolve. If all, or most of a family's savings, are held in a joint account this can be catastrophic because those funds are rendered completely inaccessible on death.
My advice is simple, by all means have the convenience of a joint account for paying household bills and other regular living expenses, but when it comes to your savings you should opt for an offshore joint account, where the funds are immediately transferred to the survivor on the death of the first account holder.
Or for those with more complicated circumstances — perhaps where children from a previous marriage are involved, a more structured savings vehicle should be set up. This should incorporate trust provisions for the children, which will provide them with a better return.
It's important to also keep in mind that monies in a UAE sole account are also frozen on death. The use of life insurance as a ready source of liquidity at a time of great need cannot be stressed too highly, and is something that should be discussed with an independent financial adviser.
The writer is a solicitor and senior estate planning consultant with Nexus Insurance Brokers LLC. If you have any questions, please e-mail advice@gulfnews.com
