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Help Me Change Brokerage Acct to Joint Tenants by the Entirety

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  • Help Me Change Brokerage Acct to Joint Tenants by the Entirety

    I live in a state that allows married couples to own assets as Joint Tenants by the Entirety (JTBE). This form of ownership offers some advantages.

    I changed ownership of my house to JTBE with my wife, and that was fairly simple.

    I've been trying to change ownership of an individual Schwab account to JTBE for over a month now with no success. I've talked with multiple reps by phone, chat, and email and the hurdles keep changing.

    Does anyone here own brokerage accounts as JTBE? If so, did you successfully change ownership (especially at Schwab) from individual to JTBE, or was the account created as JTBE?

    Note that the latest form Schwab sent me offers a choice of three ownership options, including Joint Tenants with Rights of Survivorship, but that is not JTBE. There is no JTBE option on the form. It seems that the Schwab reps don't understand this form of ownership.

    Did you have similar difficulties establishing JTBE? I'm wondering how best to accomplish this task.
    Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried (many) bags for a lovely and gracious 59 yo Cyd Charisse. (RIP) Hosted epic company parties after Friday night rehearsals.

  • #2
    I had joint accounts with a couple of firms (Fidelity, Dodge & Cox, Vanguard, etc...) which were titled Joint Tenants with Rights of Survivorship, and was able to change them rather easily to Joint Tenants by the Entirety.  With a couple of them, it was just a matter of sending a letter of instructions directing the change.  Fidelity required a form which needed a signature guarantee, but otherwise it was no problem.  The hardest one is with Vanguard, which actually requires you to open a brand new brokerage account titled JTBE; then you have to request them to transfer all assets in-kind to the new account, but in doing so, you lose cost basis data, so you have to be sure that you've kept good records.  The Schwab One Brokerage Account Form I found online (https://www.schwab.com/public/file/P-221707/APP33600-19-ADA.pdf) lists Tenants by the Entirety as an option; you may want to see if it's essentially the same process as what Vanguard told me.

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    • #3
       

      It is better to open brand new accounts titled as tenants by the entireties and transfer existing assets to them rather than retitling old accounts.  There are some court cases out there challenging "original intent" on old accounts.  Each state is different , but see this for a discussion:

      https://www.floridabar.org/news/tfb-journal/?durl=%2Fdivcom%2Fjn%2Fjnjournal01.nsf%2FAuthor%2F 3A1A0C0DE5B1C7CB85256ADB005D6255

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      • #4


        The Schwab One Brokerage Account Form I found online (https://www.schwab.com/public/file/P-221707/APP33600-19-ADA.pdf) lists Tenants by the Entirety as an option; you may want to see if it’s essentially the same process as what Vanguard told me.
        Click to expand...




        It is better to open brand new accounts titled as tenants by the entireties and transfer existing assets to them rather than retitling old accounts.
        Click to expand...


        Thanks. It might be better to start over with new accounts created as JTBE, but I'll ask about cost basis records before transferring assets in kind.
        Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried (many) bags for a lovely and gracious 59 yo Cyd Charisse. (RIP) Hosted epic company parties after Friday night rehearsals.

        Comment


        • #5




          The hardest one is with Vanguard, which actually requires you to open a brand new brokerage account titled JTBE; then you have to request them to transfer all assets in-kind to the new account, but in doing so, you lose cost basis data, so you have to be sure that you’ve kept good records.
          Click to expand...


          I had the same experience with Vanguard and to open a brand new brokerage account with JTBE titling, it has to be done by paper. As far as I know, there is no online option for this

          A big point of contention is also that accounts with JTBE titling at Vanguard cannot have listed beneficiaries

          I did lose cost basis data briefly but everything was restored within a week of the transfer

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          • #6
            I opened a new Tenants by Entirety account at Schwab and went online to order transfer of assets from the old account into this new account. Looks like I'm done there.

             

            Fidelity's new account form does not offer a Tenants by the Entirety option, but the phone rep tells me I can write this in on the form. That seems irregular. Will it hold up in court?
            Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried (many) bags for a lovely and gracious 59 yo Cyd Charisse. (RIP) Hosted epic company parties after Friday night rehearsals.

            Comment


            • #7







              The hardest one is with Vanguard, which actually requires you to open a brand new brokerage account titled JTBE; then you have to request them to transfer all assets in-kind to the new account, but in doing so, you lose cost basis data, so you have to be sure that you’ve kept good records.
              Click to expand…


              I had the same experience with Vanguard and to open a brand new brokerage account with JTBE titling, it has to be done by paper. As far as I know, there is no online option for this

              A big point of contention is also that accounts with JTBE titling at Vanguard cannot have listed beneficiaries

              I did lose cost basis data briefly but everything was restored within a week of the transfer
              Click to expand...


              The beneficiaries issue is not unique to JTBE. Vanguard allows beneficiaries on retirement accounts, and allows POD on individual taxable accounts. However, Vanguard does not allow beneficiaries to be listed on any joint account since the joint owner will in effect own the account on death.

              Comment


              • #8
                I am not a lawyer, and this isn't legal advice, but here are some things I've learned about Tenants by the Entirety (TBE). At least one Florida lawyer has pointed out that the laws of property depend on where the property is located, not where the owners reside. For example, property physically located in California (a state that does not recognize TBE ownership) could not be held as TBE, even if the owners of the property lived in Florida (a state that recognizes TBE ownership). For financial assets in national brokerages, it's tricky to determine what the legal situs of the property actually is. There is one court case in Florida where the TBE exemption was denied for a Florida couple's investment account in bankruptcy, because the financial firm was based in Wisconsin, and checks drawn from the account came from a bank in Wisconsin. The court determined that the property was located in Wisconsin (a state where TBE isn't recognized).

                Most deposit accounts with banks have a statement in the account agreement that clarifies where the account is considered to be physically located. Some deposit account agreements have language like this: "If you open an account in person at a branch, your account is located in the state of that branch. If you open an account online, and we have a branch in your state, your account is considered to be located in your home state. If you open an account online, and we do not have a branch in your state, your account is considered to be located in the state of [insert state of company HQ]." The problem is, unlike bank deposit accounts, most investment accounts do not have clear language like this in the account agreements. The closest you get is a Governing Law statement: "This agreement and matters arising in connection with your account will be governed according to the laws of the state of XXX." For Vanguard, for example, they are based in PA (a TBE state). But their governing law statement indicates that New York laws apply for matters relating to the account agreement. Whether this means that NY or PA or your home state has jurisdiction in any eventual legal proceedings is unclear. But keep in mind that the law of property depends on the legal situs of the property. Maybe I'm making too much out of nothing. After all, Fido and Vanguard will let you designate accounts as TBE...

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                • #9


                  I live in a state that allows married couples to own assets as Joint Tenants by the Entirety (JTBE). This form of ownership offers some advantages.
                  Click to expand...


                  Which are?

                  Comment


                  • #10
                     





                    I live in a state that allows married couples to own assets as Joint Tenants by the Entirety (JTBE). This form of ownership offers some advantages. 
                    Click to expand…


                    Which are?
                    Click to expand...


                    Google-able.

                    Comment


                    • #11


                      Google-able.
                      Click to expand...


                      Fair, I earned that. I was being lazy.

                      BTW, you were kind in your reply, you could have been more passive agressive and posted this.

                      Comment


                      • #12
                        My understanding is that for Tenants by the Entirety to withstand legal challenge there are four criteria which have to be met:

                        "To create a joint tenancy, the co-owners must share "four unities":

                        • Time – the co-owners must acquire the property at the same time. So, for example, if a piece of land was vested to ABCD as co-owners on 1 January 2018 and ‘A’ died before the date leaving ‘K’ to succeed him for, as between K on the one hand and BCD on the other hand, there is no unity of time. K becomes a tenant in common, while BCD are joint tenants.

                        • Title – the co-owners must have the same title to the property. If a condition applies to one owner and not another, there is no unity of title. Also, there must be unity in the sense that title must emenate from the same grantor. Thus, in the hypothetical example above, there is no unity of title between ‘K’ on the one hand and ‘BCD’ on the other hand because K derived his title from another dinor, that is; A.

                        • Interest – each co-owner owns an equal share of the property; for example, if three co-owners are on the deed, then each co-owner owns a one-third interest in the property regardless of the amount each co-owner contributed to the purchase price

                        • Possession – the co-owners must have an equal right to possess the whole property.


                        If any of these elements is missing, the joint tenancy is ineffective, and the joint tenancy will be treated as a tenancy in common in equal shares."

                         

                        For example, if you had a brokerage account in your name before you were married then changed it to a Tenants by Entirety account after marriage, my understanding is that this would not hold up if challenged since the first criteria for Tenants by Entirety has not been met - you and your wife's ownership of the property would not have started at the same time. I think Tenants by Entirety is meant to protect a house a couple buys together, or investments in a brokerage account opened by a couple with money belonging to both of them and if it is used in a situation different than this that doesn't meet the above criteria, it could be challenged in court.

                        Comment


                        • #13


                          For example, if you had a brokerage account in your name before you were married then changed it to a Tenants by Entirety account after marriage, my understanding is that this would not hold up if challenged since the first criteria for Tenants by Entirety has not been met – you and your wife’s ownership of the property would not have started at the same time.
                          Click to expand...


                          This was mentioned up above, but I opened new accounts as TBE jointly owned by my wife and me. We then transferred assets into the accounts.

                          I'm not a lawyer, but this would seem to avoid the problem. However, anything can be challenged in court, no matter how secure it might seem.
                          Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried (many) bags for a lovely and gracious 59 yo Cyd Charisse. (RIP) Hosted epic company parties after Friday night rehearsals.

                          Comment


                          • #14
                            Bumping an old thread with new information regarding how to open a Joint Tenants By Entirety brokerage account at Fidelity.

                            1. Go to https://www.fidelity.com
                            2. Click "Open an Account"
                            3. Click "See all accounts"
                            4. On the right hand side, click "Download a paper application"
                            5. Click "All forms"
                            6. Check "Open an account"
                            7. Go to page 2
                            8. Click "Non-Retirement Brokerage Account for Individual, Joint Accounts"
                            9. Click "Download PDF"
                            10. Click "I agree"
                            11. Open the downloaded PDF titled "new fidelity account non-retirement"
                            12. First page, bottom right of the "Important to Understand" explains that the option to select for "other non-trust account" in order to open a brokerage account titled "tenants by entirety"
                            13. Under part 1 Account Type, check "other non-trust account" and type in "Joint Tenants by Entirety"
                            14. Complete application and either upload via Fidelity secure message center or mail in to the address indicated.

                            Comment


                            • #15
                              Originally posted by arc4451 View Post
                              My understanding is that for Tenants by the Entirety to withstand legal challenge there are four criteria which have to be met:

                              <em>"To create a joint tenancy, the co-owners must share "four unities":</em>
                              <ul>
                              <li><em>Time – the co-owners must acquire the property at the same time. So, for example, if a piece of land was vested to ABCD as co-owners on 1 January 2018 and ‘A’ died before the date leaving ‘K’ to succeed him for, as between K on the one hand and BCD on the other hand, there is no unity of time. K becomes a tenant in common, while BCD are joint tenants.</em></li>
                              <li><em>Title – the co-owners must have the same title to the property. If a condition applies to one owner and not another, there is no unity of title. Also, there must be unity in the sense that title must emenate from the same grantor. Thus, in the hypothetical example above, there is no unity of title between ‘K’ on the one hand and ‘BCD’ on the other hand because K derived his title from another dinor, that is; A.</em></li>
                              <li><em>Interest – each co-owner owns an equal share of the property; for example, if three co-owners are on the deed, then each co-owner owns a one-third interest in the property regardless of the amount each co-owner contributed to the purchase price</em></li>
                              <li><em>Possession – the co-owners must have an equal right to possess the whole property.</em></li>
                              </ul>
                              <em>If any of these elements is missing, the joint tenancy is ineffective, and the joint tenancy will be treated as a tenancy in common in equal shares."</em>



                              For example, if you had a brokerage account in your name before you were married then changed it to a Tenants by Entirety account after marriage, my understanding is that this would not hold up if challenged since the first criteria for Tenants by Entirety has not been met - you and your wife's ownership of the property would not have started at the same time. I think Tenants by Entirety is meant to protect a house a couple buys together, or investments in a brokerage account opened by a couple with money belonging to both of them and if it is used in a situation different than this that doesn't meet the above criteria, it could be challenged in court.
                              That sounds like the standard elements for creating a regular joint tenancy, which may be different from TBE. Remember, this is all state-specific too so it would have to be researched to know for sure.

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