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Taxable brokerage account...joint or separate?

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  • Taxable brokerage account...joint or separate?

    Any reason to do one vs the other? Our checking and money market (holds our emergency fund) are joint. But not sure the pros and cons of doing joint taxable brokerage acct.

  • #2
    I moved to joint a year or two ago for potentially better asset protection.

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    • #3




      I moved to joint a year or two ago for potentially better asset protection.
      Click to expand...


      Can you elaborate? What about the joint setup increases asset protection?

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      • #4
        Joint tenancy or tenants-by-entirety may offer some asset protection benefit. I've also read that it may not offer much protection, but when I was involved in a ridiculous (non-malpractice) lawsuit, I was asked by my lawyer if my assets were under my name or our names as husband and wife. He at least implied some protection from them being jointly owned.

        Asset protection is admittedly not my strong suit.

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        • #5
          Joint. They are both of ours.

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          • #6
            Good to know. I think we are going to open joint as well.

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            • #7
              Some of this may be state specific.
              Tenants by the entirety is helpful in some states. It’s a specific type of “joint” account. It basically means you each own 100% of the account. Therefore, if you are sued, that account is protected as your spouse owns 100% of it. Just like your house.
              When creating joint accounts, I am not always able to create a joint tenants by the entirety account.
              Just so you know not all joint accounts are created equal.

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              • #8


                When creating joint accounts, I am not always able to create a joint tenants by the entirety account. Just so you know not all joint accounts are created equal.
                Click to expand...


                I was able to set my Vanguard taxable account as joint tenants by entirety, but whether or not the state recognizes it is another matter.

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                • #9
                  I set up my Vanguard account as a joint account with Tenants by Entirety (we live in a state where it's recognized) but am now running into a problem because Vanguard doesn't allow for beneficiaries to be assigned to joint non-retirement accounts.  I can transfer the account to a Trust account, where the Trust is the primary owner, but then lose the Tenants by Entirety protection.  I know a lawsuit above malpractice limits is an unlikely event, but it seems like a bad choice to have to make (having the brokerage account go through probate vs. making it more available to creditors.)  Has anyone else run into this with Vanguard?  Apparently it's not an issue at Fidelity so I may look into moving my brokerage account to there.

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                  • #10




                    I set up my Vanguard account as a joint account with Tenants by Entirety (we live in a state where it’s recognized) but am now running into a problem because Vanguard doesn’t allow for beneficiaries to be assigned to joint non-retirement accounts.  I can transfer the account to a Trust account, where the Trust is the primary owner, but then lose the Tenants by Entirety protection.  I know a lawsuit above malpractice limits is an unlikely event, but it seems like a bad choice to have to make (having the brokerage account go through probate vs. making it more available to creditors.)  Has anyone else run into this with Vanguard?  Apparently it’s not an issue at Fidelity so I may look into moving my brokerage account to there.
                    Click to expand...


                    Very interesting. I did not realize this was an issue, but I checked and our joint account does not have beneficiaries and I cannot add them online. I suppose when one spouse dies, the account will be held individually. At that point, beneficiaries could be added, I would think. But what if both perish together?

                    Why would it be different with Fidelity? This probably deserves a message to my Flagship representative. Estate planning is a pain.

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                    • #11
                      It is a pain.  Both are unlikely events (death of both parents or a large malpractice lawsuit) but it seems like we shouldn't have to pick one or the other.  I've heard that Fidelity offers Joint Tenants by Entirety accounts with the option to assign beneficiaries.  Please let us know what you find out from Vanguard.

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                      • #12
                        I heard back from Vanguard on the issue. Lame answer. How difficult would it be to allow beneficiairies?

                        Here is the response I got:

                        "Thank you for your email regarding Beneficiaries on joint taxable account . At this time, we do not offer the option to add beneficiaries to joint accounts.

                        Please note, that if one joint owner were to pass away, the other joint owner will be able to transfer the account into their name only. At that time, they will be able to list beneficiaries. Vanguard has decided that, in most cases, a Transfer on Death (TOD) plan offers minimal benefits on joint accounts.

                        Most times the only way the assets will pass to the beneficiaries is if all of the following actions take place: 1. One joint owner passes away. 2. The other joint owner does not transfer the account into their name only. 3. The second joint owner then passes away.

                        Beneficiaries on joint accounts are used to cover the rare possibility that all the joint account owners will die simultaneously. Such provisions are beyond the scope of Vanguard's TOD plan. If you want to ensure that your assets will transfer to listed beneficiaries for a joint account, we encourage you to contact an estate planning professional. The estate planning professional will be able to advise you on what steps you can take to ensure that the assets in your joint account are transferred to the appropriate beneficiaries."

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                        • #13
                          Interesting. Ours is in my name only. Spouse is the 1 beneficiary (100%). We haven't worried about estate planning past that though.

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                          • #14
                            How about forming a Limited Partnership or LLC for your brokerage accounts? Better asset protection and simpler to gift shares.

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