Here’s what couples need to know before they invest together

INVESTING for couples requires more thought than simply making sure the assets are evenly spread.

Lucy Quigley-Smith and Matt Smith with their horse Argyl Royal Heirloom at their Mylor property. Picture: Bianca De Marchi

INVESTING for couples requires more thought than simply making sure the assets are evenly spread.

Financial strategies should be examined by any couple wanting to avoid paying an unnecessary tax or legal bill, or seeking to make the most of Australia’s superannuation rules.

A key issue is that people pay tax on investment income, and they also can claim a tax deduction for the interest they pay on investment loans.

Beyond Bank Australia’s national manager of wealth management, Adrian De Silva, said most investment properties and related loans were in joint names.

“The exception to this might be where one half of the couple is the main bread winner,” he said.

“If the investment property produces net taxable income — is positively geared — you’d want the individual on the lower marginal tax rate earning that income. Conversely, where it produces a net tax loss (negative gearing) you’d want the spouse on the higher marginal tax rate incurring that.”

Similar strategies apply for managed funds and shares, and shares that pay fully franked dividends can deliver an extra income boost to people with low or zero marginal tax rates.

Superannuation can also benefit from strategies for couples, who are allowed to contribute to each other’s funds.

Couple Lucy Quigley-Smith & Matt Smit make joint decisions about their investments.

Affinitas Capital director John Purl said couples’ ages were important. Super is generally locked away until age 60 and is exempt from Centrelink means testing during that time.

“If they are trying to receive a pension you would look at putting the assets in the youngest person’s name so they are not assessed,” Mr Purl said. “If they want to access the money ASAP, put it in the older person’s name.”

Mr Purl said asset protection and estate planning were vital for couples but often overlooked, and people with significant assets should seek advice from lawyers, accountants and financial planners.

“Is there a better entity to hold the investments than in individual names?” he said. Companies, trusts and superannuation are three options.

“Is one partner a higher risk? For example, if you are a director of a company your personal assets are potentially at risk if you are sued.”

Matt Smith and wife Lucy Quigley-Smith make joint decisions about their investments and are maximising their superannuation deposits, but their assets are not held in joint names.

“Lucy mostly owns the family investments,” Mr Smith said. “As a company director, I have very few assets.”

Mr Smith said good advice for couples was simply to “start investing” for the long term. “People often procrastinate thinking they can’t afford to invest. If you invest just a little bit each week, then the accumulative effect over a decade or more will be considerable.”