vanguard beneficiary policy stinks

[Spock]

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Originally Posted by pb4uski I'm not sure if the funeral home can legally do that.... your acquaintance may want to call the body that regulates funeral homes in your state and ask if the funeral home can do that.

Thats been brought up, but legal or not its happening.
The question was if transfer of ownership would be completed within the 2 weeks of cash available... The rhetorical side question becomes "how long do you think it will take the state to respond, much less get it cleared up?"

[jazz4cash]

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Originally Posted by LOL! This made me think about something: If we both die at the same time, our adult kids would not have enough money to pay the upcoming monthly bills. We don't keep more than about 2 weeks worth of cash around and all the rest is invested. I have to sell something this week to pay an upcoming credit card bill. I guess I can set up our Fidelity joint taxable account for a TOD. Could such a transfer take place in less than 2 weeks?

If we both kick it, I guess I don't care if our bill payees have to wait a month or two to get paid but I would like to minimize stress on heirs/executor so maybe a small Credit union cd would work. These generally transfer to beneficiary with no penalty.

[Cobra9777]

We have our two kids set up as 50/50 TOD/POD beneficiaries on all of our joint accounts, which includes 2 accounts at Fidelity (taxable brokerage and CMA) and a local bank account. We also have TOD deeds on all of our real estate holdings. This was very simple to set up at Fidelity, all online. The local bank required that we go into a branch and show ID. If I was a Vanguard account holder, I'd be more than a little pissed about this... very old-school thinking. They are rapidly falling behind compared to what other financial institutions offer. We have no trusts and rely on careful titling and beneficiary designations to avoid probate. We do have a will and other documents, but virtually nothing would go through probate if we both died simultaneously.

[jazz4cash]

Is there a difference between a TOD account and listing beneficiaries?
I've been meaning to research this question but never got around to it.

[Texas Proud]

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Originally Posted by pb4uski mathjak, you raise a good point that I had never thought of but am also interested in. I just wrote a secure message to my Vanguard rep asking if they have a mechanism similar to what Fidelity offers to designate beneficiaries on joint accounts to avoid probate that perhaps isn't shown on their website. I'll let you know his response. If they don't have something similar then perhaps I'll move at least the joint account or split the joint account between our two individual accounts to avoid probate. Also, I just called Discover Bank and added our two kids as 50/50 beneficiaries to our joint savings account.

Yes, it is an interesting question.... and I cannot see Vanguard not taking this into account as it is a very common to have in any kind of estate planning....

Not having it would be a big hole....


Edit to add.... there are issues with two people being in the same accident and dying at different times... this can be addressed in a will.... not sure if it can be with a joint account....

IOW, both are in the same car accident and go to the hospital..... one dies right away.... the other lives on for a few days but eventually dies... in a will you can say that if both die within 30 days it is like the other person was already dead... so if you leave everything to someone you do not pass all asset to them and then it is distributed through their will...

I am not saying this well, but I hope I am giving enough info so people can think about it...

[mathjak107]

we have 3 kids and we were able to add all 3 kids as beneficiaries to our joint account at fidelity.

we use fidelity as we would a bank with all direct deposits and bill pays made through them . so the fact we don't have to split account ownership to simply add beneficiaries is a big plus. fidelity calls it a tod .

[RunningBum]

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Originally Posted by jazz4cash Is there a difference between a TOD account and listing beneficiaries? I've been meaning to research this question but never got around to it.

TOD (which isn't an "account" but rather a provision on your account) bypasses probate, so your heirs would get their money more quickly. It would probably reduce probate costs too.

[Cobra9777]

Splitting a joint account into 2 individual accounts is not a real solution. That's a crude workaround.

[mathjak107]

i will wait for fidelity to offer cash again promo's and move it out of vanguard .right now fidelity is offering only hundreds of free trades .

[RunningBum]

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Originally Posted by Cobra9777 Splitting a joint account into 2 individual accounts is not a real solution. That's a crude workaround.

I agree. The only disadvantage I can see right off is that it could put you out of Flagship status, plus it's the second account to keep track of, but I can imagine there are other issues.

Quite an eye opener, mathjak. It might be enough to move me out of VG if I had a joint account.

[mathjak107]

i only found it by accident . i am like why is it saying no beneficiaries designated . this is a 2nd marriage and we are very careful about including all kids equally on everything .

[braumeister]

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Originally Posted by athena53 Finally, YMMV but I didn't need as many death certificates as I got.

When my parents died (16 years apart) I needed more than the funeral home provided. Both times I had to go to the local state government office for them. Parents didn't have any local accounts so everything had to be handled by snail mail. I would always advise people to get at least one or two more than they think they need. They're not necessarily cheap, so it's wise to consider carefully.

[JoeWras]

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Originally Posted by jazz4cash If we both kick it, I guess I don't care if our bill payees have to wait a month or two to get paid but I would like to minimize stress on heirs/executor so maybe a small Credit union cd would work. These generally transfer to beneficiary with no penalty.

The first bill will likely be the funeral home. They will be looking for payment. I'm not recommending this, but a life insurance policy can be assigned to pay the funeral home and cemetery first if the heir produces the policy and assigns it.

[euro]

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Originally Posted by mathjak107 i will wait for fidelity to offer cash again promo's and move it out of vanguard .right now fidelity is offering only hundreds of free trades .

That's what I found too - but Schwab still has a cash offer going, I think. Alas, you'd have to check first if Schwab allows beneficiaries on joint accounts, but my bet is that they do. I think Vanguard is the outlier here.

[Alan]

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Originally Posted by RunningBum I agree. The only disadvantage I can see right off is that it could put you out of Flagship status, plus it's the second account to keep track of, but I can imagine there are other issues. Quite an eye opener, mathjak. It might be enough to move me out of VG if I had a joint account.

Having seperate accounts does not affect Flagship status for a married couple. My wife and I each have individual IRA accounts plus my wife has a brokerage account in her name only. (It used to be a joint account but I had my name taken off in readiness for our move back to England where everyone is taxed individually with their own tax exempt allowances etc).

We also gave each other agent authorization over our accounts so it is very easy to manage all the accounts through a single login.

[mathjak107]

so the question is :

if it is a joint account , in the event of a common death with no beneficiaries .will the money pass to the estate with no probate ? once it is in the estate can it be distributed per a will's instructions with out probate ?

[Dash man]

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Originally Posted by Texas Proud Yes, it is an interesting question.... and I cannot see Vanguard not taking this into account as it is a very common to have in any kind of estate planning.... Not having it would be a big hole.... Edit to add.... there are issues with two people being in the same accident and dying at different times... this can be addressed in a will.... not sure if it can be with a joint account.... IOW, both are in the same car accident and go to the hospital..... one dies right away.... the other lives on for a few days but eventually dies... in a will you can say that if both die within 30 days it is like the other person was already dead... so if you leave everything to someone you do not pass all asset to them and then it is distributed through their will... I am not saying this well, but I hope I am giving enough info so people can think about it...

This situation is why we got a trust. We each have a child from a previous marriage. Each will get their share as at the death of the second of us the assets go into separate trusts for each child.

[gindie]

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Originally Posted by athena53 Finally, YMMV but I didn't need as many death certificates as I got. SS may have kept one but everyone else was happy looking at it, maybe copying it and then handing it back to me.

Yeah, Prudential Insurance was the best in that regard when my Mom passed away. Got on the phone with them, they asked when and where she died, and the representative looked up the Obit on Legacy.com right then and there. Said that's all she needed!

The check came about a week later.

[pb4uski]

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Originally Posted by mathjak107 so the question is : if it is a joint account , in the event of a common death with no beneficiaries .will the money pass to the estate with no probate ? once it is in the estate can it be distributed per a will's instructions with out probate ?

Estate Planning For Simultaneous Deaths | Investor Solutions

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Consequently, the jointly held property of each spouse, including insurance proceeds and retirement accounts, goes into separate probate. This is a nuisance for their heirs and increases administrative expenses. For couples with enough assets to face estate taxes, however, it can be very expensive.

[mathjak107]

i kind of thought that wouldn't work. but that article is really about what happens where they can't determine who died first .