Listing Asset (Investment Acct) in Will

[gwraigty]

An educated guess on my part is that since if they did offer beneficiary designations for joint accounts, the only situation where the beneficiaries would come into play is where the joint account owners died simultaneously... if one died before the other then the ownership of the joint account would go to the surviving joint account owner (who could then change beneficiaries if they wish to).

Since whether the joint owners died simultaneously or not can be subjective, by not allowing beneficiary designations for joint accounts they avoid the simultaneous death issue entirely and the possibility of paying out to the beneficiaries based on a simultaneous death that is later changed and results in a change in how the proceeds would have been distributed.

For example, say Dick and Jane die in a car accident, the deaths are judged to be simultaneous and the proceeds are distributed to 5 people equally. However, a case can be made that Jane died first and Dick's will names his son Joe as sole beneficiary. After the joint account proceeds are distributed, Joe files suit claiming that Jane died first so when Dick died he was the sole owner of the account and that Joe is entitled to the entire proceeds as Joe is Dick's sole beneficiary in Dick's will.

If Joe wins the case in court and the court decides that Jane died first and that Joe is entitled to the entire proceeds then Vanguard would have to find a way to clawback the distributions (which may have already been spent) or be on the hook for the difference.

Then why do other financial institutions allow beneficiary designations on joint accounts? Their legal departments are much more aware of these possibilities than the average person.

Joint accounts WROS usually aren't governed under a will. States also have varying laws about survivorship, usually measured in days. Then there's the Uniform Simultaneous Death Act (120 hours), which may govern when there is no will, or a beneficiary of a life insurance policy and the insured die at the same time. In the latter case, the named alternate beneficiary would get the policy proceeds.

My state has a Simultaneous Death Act that says (in the absence of a longer survivorship clause in a will) that unless there's clear and convincing evidence that the survivor of jointly owned property WROS survived at least 120 hours after the death of the other (assume only 2 joint owners for simplicity), then ownership reverts to joint tenants in common. 50% of the property would then pass via probate under the terms of each decedent's will. POD accounts/property are specifically exempt from probate.

The above leads me to believe that Joe would receive proceeds of the POD account only if he is a named beneficiary, and in the percentage designated. POD designations always trump what the will says, or intestate law.

And I've done enough online research on this matter for today. It's easily confirmed with a little effort at your leisure.

 

[pb4uski]

I'm guessing that Vanguard and others have arrived at different judgements as to the significance of the risk.

Given that not all states have a Simultaneous Death Act in place that is probably yet another reason to avoid the issue.

So in your state Joe would lose and in another state he might prevail... so if Vanguard gives it to you because you live in a state with a Simultaneous Death Act but then you move to a state that does not.... their risk is increased. Easier to just say no to everyone and if Fidelity and others are willing to accept the risk then good for them.

 

[gwraigty]

In our estate plan, it explicitly says that in a common disaster it will be assumed that I predeceased DW. This lets the plan run cleanly, my part first then hers. No mixing up. Do your home-made documents include language like this? Maybe. Maybe not.

"Home-made" documents aren't really. You make it sound like OP wants to type whatever in a word processing program. We used Willmaker to draft several of our wills over the years. (We used a lawyer for our first and weren't impressed.) These DIY solutions use state specific laws and are appropriate in many cases, including naming guardians for minor children, specific bequests, survivorship clauses, etc. There are detailed instructions. They may not be the best option for complicated situations.

It sounds as if OP only needs the will to cover non-POD/TOD assets, which needn't be an overly complicated scenario. My suggestion, several posts back, would allow OP to draft this will in a way that would be good for quite awhile. No having to change because of an account change, etc.

 

[gwraigty]

Sounds logical to me. Thanks for the example.

It may sound logical, but it may not be right, no offense intended to pb4. See my post for why. POD designations cannot just be ignored.

 

[Cobra9777]

A couple thoughts

I would not tolerate a financial institution telling me I can't designate TOD/POD on a joint account. That's ridiculous. I'd move the money somewhere else.

Our portfolio at Fidelity consists of Vanguard and iShares ETFs. iShares trade for free but Vanguard ETFs incur a $4.95 commission on trades (which are rare for us). Vanguard mutual funds would be very costly to trade at Fidelity.

Fidelity money market funds work fine for the small amount of cash we hold.

Texas allows TOD on real estate and motor vehicles. And all of our financial accounts have proper beneficiary designations, including TOD/POD on joint accounts. That covers everything except household goods, which the kids can sell or divide up however they see fit.

We both have wills that we did on LegalZoom several years ago for maybe $200. That included living wills and durable POAs. But with the set-up above, everything will transfer outside of probate. The wills would never be needed for anything. The living wills and durable POAs are quite necessary and well worth the cost.

Our situation is very straightforward. But if there were complicated relationships or business assets, or if I lived in a state without TOD on real estate, I would not hesitate to hire a pro.

 

[JustCurious]

We have a loose leaf binder given to us when we did our estate planning. In the front cover There are 3 pieces of paper. One has all my passwords,...

What purpose does it serve for someone to have your passwords after you are dead?

 

[jkern]

Two points.

1. Re: playing attorney and writing your own will: A man who is his own lawyer has a fool for a client.

2. Re: NOLO, LegalZoom, Etc.: These are NOT law firms and thus are not required to abide by the code of ethics that every attorney in the US has to abide by. Oh yeah, they can't be sued for malpractice, either since they don't offer legal advice. A "real" attorney? They can be sued.

A cliche that's too simplistic. I wouldn't compare a simple Will to defending one's self in a murder trial.

 

[gwraigty]

What purpose does it serve for someone to have your passwords after you are dead?

Passwords may be necessary in the event of incapacity, for simple things. For example, most of our bills are paperless and come to my email address. With those passwords, my husband would be able to login and change the email address so the bills would come to his email instead.

 

[OldShooter]

We have never been advised to use TOD, so I have not thought much about it until I started hearing about it in this forum.

It seems quite inflexible to me. For example, hypothesize that your spouse (if any) predeceases you and you become legally incompetent due to Alzheimers. Then your TOD beneficiary dies. Five years later you die. Left alone I suppose the asset goes into the benficiary's estate. Do you TOD-ers assume this is OK? That you have a POA who will probably change the TOD to do what you'd wish? Do you just not worry about unpleasant scenarios?

Not looking to argue. Just curious.

 

[ExFlyBoy5]

A cliche that's too simplistic. I wouldn't compare a simple Will to defending one's self in a murder trial.

I can tell you many stories of probate that *should* have been simple but were anything but. I stand by what I said.

 

[JustCurious]

Passwords may be necessary in the event of incapacity, for simple things. For example, most of our bills are paperless and come to my email address. With those passwords, my husband would be able to login and change the email address so the bills would come to his email instead.

Yes, I can see the value for bills, I was thinking in terms of financial accounts. I don't think it would be wise to access someone's bank or brokerage account using their username and password after they are dead.

 

[gwraigty]

We have never been advised to use TOD, so I have not thought much about it until I started hearing about it in this forum.

It seems quite inflexible to me. For example, hypothesize that your spouse (if any) predeceases you and you become legally incompetent due to Alzheimers. Then your TOD beneficiary dies. Five years later you die. Left alone I suppose the asset goes into the benficiary's estate. Do you TOD-ers assume this is OK? That you have a POA who will probably change the TOD to do what you'd wish? Do you just not worry about unpleasant scenarios?

Not looking to argue. Just curious.

It's not inflexible because you can name more than one TOD beneficiary, both as primaries and contingent. The forms at Fidelity and Schwab allows for up to 4 primary and 4 contingent. Up to 8 people would have to predecease us before the accounts would have to go through probate. A POA wouldn't have to change anything. You could also prohibit or allow the POA to do this in your documentation.

 

[gwraigty]

Yes, I can see the value for bills, I was thinking in terms of financial accounts. I don't think it would be wise to access someone's bank or brokerage account using their username and password after they are dead.

It shouldn't be necessary either. Contact to handle any necessary business after a death could be handled by phone, or for a joint account, another login could be set up.

 

[pb4uski]

We have never been advised to use TOD, so I have not thought much about it until I started hearing about it in this forum.

It seems quite inflexible to me. For example, hypothesize that your spouse (if any) predeceases you and you become legally incompetent due to Alzheimers. Then your TOD beneficiary dies. Five years later you die. Left alone I suppose the asset goes into the benficiary's estate. Do you TOD-ers assume this is OK? That you have a POA who will probably change the TOD to do what you'd wish? Do you just not worry about unpleasant scenarios?

Not looking to argue. Just curious.

Another example... hypothesize that your spouse (if any) predeceases you and you become legally incompetent due to Alzheimers. Then the beneficiary designated in your will dies. Five years later you die. Left alone I suppose the asset goes into the benficiary's estate under the terms of your will. Do you assume this is OK?

 

[OldShooter]

In our wills and trusts, lower-probability events are anticipated as much as possible. Almost all the money actually goes into trusts to protect against spendthrifts, judgments, divorcing spouses, etc. In the event of deaths of beneficiaries, etc. there are alternatives but the ultimate alternative is that the trust balance goes to charity.

We also do a couple of "clever" things like create a trust for grandchildren's education that, if they do not go for post-secondary education, is donated to charity. "Use it or lose it" motivation to pursue education. We have a special needs grandchild, too. His trust is carefully written so that it will not interfere with any government benefits he may receive at some point.

 

[CardsFan]

In our wills and trusts, lower-probability events are anticipated as much as possible. Almost all the money actually goes into trusts to protect against spendthrifts, judgments, divorcing spouses, etc. In the event of deaths of beneficiaries, etc. there are alternatives but the ultimate alternative is that the trust balance goes to charity.

We also do a couple of "clever" things like create a trust for grandchildren's education that, if they do not go for post-secondary education, is donated to charity. "Use it or lose it" motivation to pursue education. We have a special needs grandchild, too. His trust is carefully written so that it will not interfere with any government benefits he may receive at some point.

Controlling from the grave? There may be good reasons to do that, in your case.

In our case, everything we have goes to DS. He is 37, responsible, and soon to be engaged and married.

If there are grandkids, we will likely start 529's. But that is for the tax advantage, if they continue on to school.

We have everything set up as POD/TOD. We do have a will, but that will only handle household items and any incidentals.

To OP, Use a lawyer to set up your will. Ours is now close to 20 years old, the original lawyer is dead, and I am thinking we need to run it by some one, just to be sure it is up to date.

 

[OldShooter]

... the original lawyer is dead ...

We've deliberately chosen a lawyer who is 30 years younger, hoping that she will be around to help with the estate when the time comes.

 

[CardsFan]

We've deliberately chosen a lawyer who is 30 years younger, hoping that she will be around to help with the estate when the time comes.

In the case of a trust, I think it IS important to have the lawyer that drafted it involved, so I think that was a wise decision. In the case of a will, probably not as important, but we will look into it anyway.

 

[FIREchief]

In the case of a trust, I think it IS important to have the lawyer that drafted it involved, so I think that was a wise decision.

Why do you think this? A well drafted trust is a stand alone document (either irrevocable or will become irrevocable upon Grantor's death).

 

[FIREchief]

We also do a couple of "clever" things like create a trust for grandchildren's education that, if they do not go for post-secondary education, is donated to charity. "Use it or lose it" motivation to pursue education.

Are you sure that this is truly "clever?" Can you envision any scenario where a new college graduate might better serve themselves by beginning their career immediately instead of taking one more year off in college? Believe it or not, there are fields where a top graduate with a four year degree and a strong year of experience is more valuable, and much further ahead, than a new grad with a Master's degree. ("fortunately," my grandparents all died penniless, so I really can't relate)

 

[CardsFan]

Why do you think this? A well drafted trust is a stand alone document (either irrevocable or will become irrevocable upon Grantor's death).

Well, since I don't have any trusts, and have no intention to get any, it is my impression that they can be more complicated and subject to interpretation. Just an opinion. Everyone has one.