Accredited Investor Status with a Partner or Spouse

Written for investors. Updated on September 26, 2023.

In the dynamic landscape of investments, achieving accredited investor status can be a game-changer, providing access to exclusive opportunities. If you and your partner have substantial joint income or net worth, you might be closer to obtaining this prestigious designation than you realize. In this article, we’ll build on top of our previous post of how individuals qualify as accredited investors, and explore how the SEC evaluates accreditations for spousal or domestic partnerships, the process of combining incomes and net worth, and the benefits that come with achieving accredited investor status alongside a partner.


Understanding Accredited Investor Status for Partnerships: An Overview

In essence, an accredited investor designation, as defined by the SEC, recognizes individuals who meet certain financial thresholds, granting them entry to investment avenues that are typically reserved for the financially sophisticated. For married couples or partners in a domestic arrangement, meeting these criteria collectively can open doors to new investment horizons.

 

Navigating the Accreditation Path: Joint Evaluation and Qualification

For couples or domestic partners, the SEC evaluates their combined financial standing to determine whether they qualify as accredited investors. Here are the primary considerations:

Joint Income: If your combined annual income exceeds $300,000, your spouse or partner and you meet the income threshold for accredited investor status. This acknowledgment takes into account the financial stability that a partnership can offer.

Combined Net Worth: By combining your net worth with your partner’s, you might find yourselves meeting the $1 million net worth requirement. This calculation excludes the value of your primary residence, reflecting the SEC’s focus on financial assets.

Shared Expertise: Partners who possess professional expertise in finance, investment, or related fields may also qualify based on their combined knowledge and experience.


Clarifying Joint Evaluation: Who is considered a partner?

The SEC expanded its definition of accredited investors from married couples to couples in a domestic relationship, adding “the term ‘spousal equivalent’ to the accredited investor definition, so that spousal equivalents may pool their finances for the purpose of qualifying as accredited investors”. This addition made the hurdle to accredited investor status more accessible for many households throughout the United States. Read about that 2020 SEC press release here.


Unveiling the Advantages: Joint Accredited Status

Gaining accredited investor status, as a partnership or as a married couple, offers opportunities beyond individual non-accredited capabilities. This designation provides access to investment avenues such as private equity investments, private placements, hedge funds, and venture capital funds, all of which hold the potential for significant returns and are typically unaccessible to non-accredited investors.


Charting the Course: Your Joint Financial Journey

Becoming accredited investors as a domestic partnership or as a married couple involves demonstrating not only individual financial strength but also the collective capacity to handle sophisticated investments. The path may vary, but the destination promises access to a spectrum of investment possibilities.


Final Reflections: Embracing New Investment Horizons as Partners

Accredited investor status for partnerships or couples acknowledges the combined financial prowess and risk tolerance of domestic partners. If you and your partner meet the criteria—whether through joint income or net worth—consider embracing the opportunities this designation presents. However, it’s crucial to exercise due diligence by researching thoroughly and seeking advice from experts before embarking on any joint investment endeavors.

In conclusion, achieving accredited investor status as a partnership or married couple involves more than numbers; it signifies your joint readiness to explore advanced investment avenues. For couples or domestic partners with significant combined financial resources, this designation could mark the beginning of an exciting journey in the realm of private investments.

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