We all set out on the path of married life or partnership with trust and optimism. Automatically that sentiment extends to trusting one another with joint bank accounts. But what happens to jointly held money when things go wrong - when a couple separates, when one spouse or partner is declared bankrupt, when fraud is committed or one partner dies?

Carolyn Bond, joint chief executive of the Consumer Action Law Centre, says new couples often assume they should have joint accounts because to do otherwise would be viewed as a breach of trust. This is especially the case if the home loan is jointly borrowed. It seems natural to link the loan to a joint account. The banks, too, are keen to bundle things up and sweeten it with lower fees.

Bond recommends people give some thought to the issue before going along this path. She says people think a joint account gives them more security - they can get access to funds at any time - but it also means they are giving their partner access.

Joint bank accounts come in two forms, requiring two signatures for every transaction or a signature from either party to get access to the funds. The former can be cumbersome for the signatories and the banks alike so the latter is the most common arrangement.

"Mostly this is not a problem," Bond says. "But it really causes problems where there is some form of gambling problem or mental illness."

It can become even more serious where home loans are involved. Most mortgages are held in joint names and have redraw facilities. A situation may arise where one party deposits a large inheritance or super payout into the mortgage and the money is subsequently withdrawn by the other party without consultation and frittered away or sunk into a failing business.

Bond says couples should choose whether one party or both should have to sign on the redraw facility and suggests that having both sign could avoid a lot of trouble later.

Bankruptcy of one of the account holders can be another joint account trap.

With separate bank accounts, it is far easier to separate the non-bankrupt assets from the assets being targeted by the bankruptcy trustee.

Jenny McMillan, head of Estate Planning at Trust Legal Services at Trust Company, says: "With joint bank accounts if one of the account holders becomes bankrupt, his or her interest in the account will be an asset of the estate in bankruptcy. That interest may be equivalent to 50 per cent of the balance or may be more or less than that.

"If separate accounts are held, the spouse's account should not become an asset of the estate in bankruptcy, unless the trustee in bankruptcy is able to show the funds passed from the bankrupt to that other account for less than market value during the claw-back period."

The claw-back period for preference payments by bankrupts is usually six months but in 2006 changes were introduced that allow bankruptcy trustees to claw back property transferred to a related party if the transaction was made up to four years previously if made at less than market value.

Those changes also empowered the court to make orders in relation to property or money where, during the five years up to the bankruptcy, the person acquired an interest in property as a direct or indirect result of contributions made by the bankrupt. Also, if the value of the person's interest in property increased as a direct or indirect result of contributions made by the bankrupt and the bankrupt used or derived a benefit from the property during that period.

If the bankruptcy trustee does a 50-50 split of bank account money, that may not take into account the non-bankrupt partner's $300,000 inheritance put into that account. The onus will be on the partner with the inheritance to prove it was his or hers and not a joint asset. "As a general rule the more your finances are tied up with someone the more you are likely to have some sort of difficulty showing that it's yours," Bond says.

However, if accounts are held separately, the bankruptcy trustee cannot have access to the non-bankrupt partner's account unless the trustee can prove the bankrupt deliberately transferred assets to that account to defeat creditor claims on his assets.

Barry Taylor, a partner with HLB Mann Judd, says it is a good idea for partners who are liable to be affected by another partner's imploding financial situation to keep their debts and assets as separate as possible to minimise the risk of being contaminated.

There are situations, though, where having a joint account has benefits.

"Joint bank accounts enable you to see exactly what the other partner is doing with the money and how they are spending it," Bond says. "That can be a source of fights but, because people don't like to talk about their finances, it can also bring them closer together as they are forced to discuss the health or otherwise of the joint account and to work out a budget and how the money should be spent."

Problems can arise when one partner dies. McMillan says that when a bank account is in the name of the partner who dies, the surviving spouse or partner must find out whether there is a will or might have to apply for a grant of probate or letters of administration before they can operate the deceased partner's account. This can take months.

If it is a small estate a bank may allow the next of kin or nominated beneficiary to handle the account on production of a death certificate but would also insist on being given an indemnity that if anyone else makes a claim on the deceased estate's money they will reimburse it.

With joint bank accounts, the surviving partner can have continuing access to the money, so in that situation having a joint bank account is an advantage.