Why Are Regular Assets and Savings Commingled?
My spousal unit and I share expenses but keep our finances completely separate. We are self-employed, each with our own businesses. And we both have very wild fluctuations in our regular assets and savings.
Whereas ESPlanner accommodates separation for Retirement Accounts, it commingles Regular Assets and Savings.
Given our situation, it seems to make more sense to keep our numbers separate while feeding the totals into the calculations.
Is there a rationale for commingling Regular Assets and Savings, or is separation of these items on a wish list? Or both?
Thank you,
Rose
RSS
Under those circumstances, it may make more sense for you to plan things as if your were actually two single people if, indeed as you say, you keep everything separate. However you give up a number of things by doing so (marriage deductions, economies of shared living).
It may also make sense to model your family as a partnership although some of the same caveats apply (although it may be the right thing to do do especially if you file separately).
While you do, indeed, keep things separate on a detailed level, ESPlanner is not a bookkeeping program and is designed to manage things as a whole. From ESPlanner's perspective unless you're filing separately, the fact that you keep separate check books doesn't matter because it assumes that you share some sort of common agreement about what to do with your resources (buy a house, invest in real estate, etc) and that in the event of death the resources transfer from spouse to spouse without penalty.
So the rationale is simplicity (and cutting down on the number of state variables that we have to keep track of).
Larry can probably add some additional back-story as I wasn't around when the product was originally designed.
Best,
Dick Munroe
Thank you for your quick reply, Dick.
I should clarify my original post ... "spousal unit" is our term for "partner." We jointly own the home; we file separate taxes; we are each other's beneficiaries. Sort of married, filing separately, ... but not. I'm sure it's not an unusual situation.
So ... we are, in fact, modeling as a partnership. And that is why I wondered why the Regular Assets were commingled when expenses were not.
Additional enlightenment is always welcome.
Rose
Well, technically speaking, they aren't. If you take a look at the assumptions folder, you'll find buried in there somewhere a way to specify what %age of the regular assets are held by the "wife" role of partnership as well as a similar mechanism for %age of dividends and interest are earned by the "wife" role of the partnership. We report the total in a single column for simplicity. Technically speaking we could enforce a more complete separation but as I said, ESPlanner isn't really a bookkeeping package, it's an economic simulator. So to the extent that your partnership acts as a unit, it's not unreasonable to report things like regular assets as a single value while allowing some [rough] kind of control over the tax implications, which we do. So it's a question of "good enough for government work, close enough for rock and roll". Maybe really, really, separating everything for partnerships would generate a slightly more accurate simulation but it would definitely be a boatload more work and would introduce more state variables into other places that would slow parts of ESPlanner down considerably.
Best,
Dick Munroe