Do we need a Will/Trust if all assets at Vanguard ?

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Do we need a Will/Trust if all assets at Vanguard ?

Postby Bustoff » Thu Feb 07, 2013 6:42 am

Do we need an estate plan such as a Will or Trust if all our assets are in Vanguard with up-to-date beneficiary designations ?
We are married and currently retired. We have no children.
Is it true that a Will is mostly for personal possessions like a vehicle, house and its contents ?
Last edited by Bustoff on Thu Feb 07, 2013 9:41 am, edited 1 time in total.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby OneDay » Thu Feb 07, 2013 9:11 am

Well if the worst was to happen today, where would you want your money to go? Does the state agree with you? Do you want it locked up in probate? Do the people or entities that you want to get your money know that they should be getting it or how to get it?


Just a couple of questions to ask yourself to help determine.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby dbr » Thu Feb 07, 2013 10:03 am

No one should ever not have a will to make clear exactly what is to happen and who is to manage what happens (the executor).

Whether one needs trusts or other devices is a different question. In many cases assets can be passed down by beneficiary procedures, which are essentially required anyway for many accounts and can be added to others via TOD/POD.

I think everyone with any significant assets at all and any care about what happens to those assets should consult a lawyer at least once in their lifetime to discuss the ramifications of how things are set up.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby hand » Thu Feb 07, 2013 10:15 am

Conceptually, you're correct - no will needed if all assets are at Vanguard with designated beneficiaries.

Practically, however, most would say this approach is foolish:
1) Unless your rent / lease everything, it is likely you do have assets outside Vanguard (car, home, furniture etc.).
2) Other than a small fee and a bit of time, creating a will and related documents is not too difficult.
3) There are numerous other documents (Power of Attorney, Healthcare directive) that you should consider at same time you are making a will.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby bsteiner » Thu Feb 07, 2013 10:48 am

There are a few reasons you might want to have a Will and have your assets pass under your Will rather than by beneficiary designation.

If you want to keep the assets from being included in the beneficiaries' estates for estate tax purposes, or you want to protect the assets from the beneficiaries' potential creditors, including spouses and Medicaid, then you might want to have a Will in which you leave your assets to them in separate trusts for their benefit, with each person having effective control over his/her trust, rather than having the assets go to them outright either under your Will or by beneficiary designation.

You might also want to have a Will and have your assets pass under your Will rather than by beneficiary designation so you can appoint an executor who can file your estate tax return, file your last income tax return, pay your debts and funeral expenses, and have access to the assets to be able to do so.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby nisiprius » Thu Feb 07, 2013 10:39 pm

My wife and I have what is called "I-love-you-honey" wills. My guess is that we don't actually need one. And my guess is that I could gen up a perfectly good one with a Nolo book. But what the hay? It cost $500 to go to the storefront with the scales-of-justice decal on the window, and have a real live lawyer draw up two wills, two durable powers of attorney, and a declaration of homestead. And he keeps them on file. And he was able to scare up a couple of witnesses.

Also, what about The Dilbert guide to personal finance? Point #1 is "make a will."

I mean, just do it.

At least I know someday our kids won't have to keep digging forever through the house trying to figure out whether there is a will to find.
Last edited by nisiprius on Fri Feb 08, 2013 3:58 pm, edited 1 time in total.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby Browser » Thu Feb 07, 2013 11:02 pm

You probably ought to spend a half hour with an attorney specializing in Estate Planning and discuss your situation. A good attorney will cost you maybe $100-$150 for the time and you can be satisfied that you either do or do not need to create a Will or Trust.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby BHCadet » Thu Feb 07, 2013 11:09 pm

Yes, if you have other properties such as a house, cars, jewelries, furniture’s, etc., you need a will preferably a trust.
Do you want your assets go thru probate and risk going to someone that is not in your wish?
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby artthomp » Fri Feb 08, 2013 2:39 pm

dbr wrote:No one should ever not have a will to make clear exactly what is to happen and who is to manage what happens (the executor).

Whether one needs trusts or other devices is a different question. In many cases assets can be passed down by beneficiary procedures, which are essentially required anyway for many accounts and can be added to others via TOD/POD.

I think everyone with any significant assets at all and any care about what happens to those assets should consult a lawyer at least once in their lifetime to discuss the ramifications of how things are set up.


We live in Missouri and at first our lawyer suggested we use pay upon death (POD) and trnasfer upon death (TOD) for all of our Missouri assets to avoid fairly high probate fees.

However, my lwife had inhertied a farm in Oklahoma and unless we immediately transferred owneeship to our children the only practical way to arrange the transfer of this property after our deaths was through a trust.

We ended up placing all of our property and taxable assets in a new trust becasue it made the transfer to our children so easy and also avoidied the high probate fees.

Our Vanguard IRAs and Roth IRAs which are the largest component of our estate at the present time pass automatically to our children so we left them outside the trust.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby Browser » Fri Feb 08, 2013 3:26 pm

I recently encountered a similar situation with most of my assets in IRA and 403(b) accounts which pass via beneficiary designations and are not probated. My attorney created a Will to govern the distribution of tangible personal property; it specifies that a memorandum can be attached at any time to specify the distribution of property in order that the Will itself does not have to be continually updated for that purpose. It also contains what is called an Ultimate Distribution Clause, which is a fallback to cover the (hopefully unlikely) event that there is no-one still living who is a beneficiary of the financial accounts or there is a snafu in implementing the beneficiary designations - which might result from the custodian not recognizing them as valid, not being willing to track down beneficiaries, or the beneficiaries not acting or being able to act, in a timely manner to claim, etc. Without a UDC in a Will, the State could become the executor of your estate which would include your investment accounts. It also covers such things as granting specific powers to the executor to manage your assets, settle claims and debts, borrow, etc. etc. This might allow claims, debts, and obligations existing at your death to be settled with funds outside your IRA and other tax-sheltered accounts. Otherwise, beneficiaries of those accounts might be forced to make larger than desired taxable withdrawals in order to do this. One objective in setting up an inherited IRA or other tax-sheltered account is to allow the beneficiaries to "stretch" by taking only the required minimum distributions. It would be good to speak with an estate planning attorney familiar with handling inherited IRAs and other tax-sheltered accounts to make sure you have considered all the relevant factors.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby tadamsmar » Fri Feb 08, 2013 3:38 pm

Bustoff wrote:Do we need an estate plan such as a Will or Trust if all our assets are in Vanguard with up-to-date beneficiary designations ?
We are married and currently retired. We have no children.
Is it true that a Will is mostly for personal possessions like a vehicle, house and its contents ?


Look up the intestate laws/regulations in your state. Are you happy with what will happen to your possessions if you and your wife die possibly at the same time?

The other 3 documents you might consider are (in NC at least) POA, Healthcare POA, Advanced Directive. Do you know the defaults if you and your wife don't have those and are you happy with them?

BTW, did you designate a contingent beneficiary on your Vanguard accounts? If not, what happens to those if you and your wife die? If so, then do you want your other possessions to go to the same contingent beneficiary?
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby Steelersfan » Fri Feb 08, 2013 3:46 pm

I designated beneficiaries on my Vanguard IRA account but am using a will for my non-IRA accounts. This restriction (from the Vanguard form) was too restrictive for me:


You can’t name a group of individuals, such as “my descendants” or “children, per stirpes,” as your beneficiaries for a Transfer on Death Plan because an authorized party, usually your executor, must identify the members of the group after your death. If you don’t plan to have an estate that will go through probate and don’t have an executor, there may be no
authorized party who can act on behalf of your estate to identify your descendants or other members of another group of beneficiaries.



http://www.vanguard.com/pdf/bdbp.pdf?2210039149
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby tadamsmar » Fri Feb 08, 2013 4:11 pm

Steelersfan wrote:I designated beneficiaries on my Vanguard IRA account but am using a will for my non-IRA accounts. This restriction (from the Vanguard form) was too restrictive for me:


You can’t name a group of individuals, such as “my descendants” or “children, per stirpes,” as your beneficiaries for a Transfer on Death Plan because an authorized party, usually your executor, must identify the members of the group after your death. If you don’t plan to have an estate that will go through probate and don’t have an executor, there may be no
authorized party who can act on behalf of your estate to identify your descendants or other members of another group of beneficiaries.



http://www.vanguard.com/pdf/bdbp.pdf?2210039149


Vanguard allowed me use the form "John Doe per stirpes"
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby Steelersfan » Fri Feb 08, 2013 4:49 pm

tadamsmar wrote:
Steelersfan wrote:I designated beneficiaries on my Vanguard IRA account but am using a will for my non-IRA accounts. This restriction (from the Vanguard form) was too restrictive for me:


You can’t name a group of individuals, such as “my descendants” or “children, per stirpes,” as your beneficiaries for a Transfer on Death Plan because an authorized party, usually your executor, must identify the members of the group after your death. If you don’t plan to have an estate that will go through probate and don’t have an executor, there may be no
authorized party who can act on behalf of your estate to identify your descendants or other members of another group of beneficiaries.



http://www.vanguard.com/pdf/bdbp.pdf?2210039149


Vanguard allowed me use the form "John Doe per stirpes"


And that was on your taxable account(s)?
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby vtanzi » Fri Feb 08, 2013 5:03 pm

Bustoff wrote:Do we need an estate plan such as a Will or Trust if all our assets are in Vanguard with up-to-date beneficiary designations ?
We are married and currently retired. We have no children.
Is it true that a Will is mostly for personal possessions like a vehicle, house and its contents ?


YES YES YES---I think you are missing the point of why you get a Will/Trust. It is much more comprehensive then just assets. A good lawyer will set up a health proxy, powers of attorney etc. You want to protect yourself so do it right. It will not cost that much--its a 1 time fee and will protect you and your wife down the line.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby tadamsmar » Fri Feb 08, 2013 5:20 pm

Steelersfan wrote:
tadamsmar wrote:
Steelersfan wrote:I designated beneficiaries on my Vanguard IRA account but am using a will for my non-IRA accounts. This restriction (from the Vanguard form) was too restrictive for me:


You can’t name a group of individuals, such as “my descendants” or “children, per stirpes,” as your beneficiaries for a Transfer on Death Plan because an authorized party, usually your executor, must identify the members of the group after your death. If you don’t plan to have an estate that will go through probate and don’t have an executor, there may be no
authorized party who can act on behalf of your estate to identify your descendants or other members of another group of beneficiaries.



http://www.vanguard.com/pdf/bdbp.pdf?2210039149


Vanguard allowed me use the form "John Doe per stirpes"


And that was on your taxable account(s)?


I only have confirmations for my IRAs.

I am just letting my will handle the taxable accounts. Probate is not so scary in my state.

Sorry for the confusion.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby LadyGeek » Fri Feb 08, 2013 5:30 pm

This thread is now in the Personal Finance (Not Investing) forum (estate planning).
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Advice you should consider

Postby Gill » Fri Feb 08, 2013 5:56 pm

bsteiner wrote:There are a few reasons you might want to have a Will and have your assets pass under your Will rather than by beneficiary designation.

If you want to keep the assets from being included in the beneficiaries' estates for estate tax purposes, or you want to protect the assets from the beneficiaries' potential creditors, including spouses and Medicaid, then you might want to have a Will in which you leave your assets to them in separate trusts for their benefit, with each person having effective control over his/her trust, rather than having the assets go to them outright either under your Will or by beneficiary designation.

You might also want to have a Will and have your assets pass under your Will rather than by beneficiary designation so you can appoint an executor who can file your estate tax return, file your last income tax return, pay your debts and funeral expenses, and have access to the assets to be able to do so.

OP, listen to this advice. It comes from someone who is a recognized expert in the field.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby Browser » Fri Feb 08, 2013 8:07 pm

tadamsmar wrote:
Steelersfan wrote:I designated beneficiaries on my Vanguard IRA account but am using a will for my non-IRA accounts. This restriction (from the Vanguard form) was too restrictive for me:


You can’t name a group of individuals, such as “my descendants” or “children, per stirpes,” as your beneficiaries for a Transfer on Death Plan because an authorized party, usually your executor, must identify the members of the group after your death. If you don’t plan to have an estate that will go through probate and don’t have an executor, there may be no
authorized party who can act on behalf of your estate to identify your descendants or other members of another group of beneficiaries.



http://www.vanguard.com/pdf/bdbp.pdf?2210039149


Vanguard allowed me use the form "John Doe per stirpes"

I recently went through a process with Vanguard regarding the use of the "per stirpes" provision with my IRA accounds, and tadamsmar helped clue me in on that. Now I see from Steelersfan that beneficiary designations for non-IRA accounts Transfer on Death Plan seems to be a different can of worms; wherein they don't accept the "per stirpes" provision at all. Just when I thought I understood this stuff. Frankly, I don't know why they accept it for IRA accounts but not for taxable accounts. Seems like the same issues would prevail for both - what am I missing here?
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby Steelersfan » Fri Feb 08, 2013 9:23 pm

Browser wrote:
tadamsmar wrote:
Steelersfan wrote:I designated beneficiaries on my Vanguard IRA account but am using a will for my non-IRA accounts. This restriction (from the Vanguard form) was too restrictive for me:


You can’t name a group of individuals, such as “my descendants” or “children, per stirpes,” as your beneficiaries for a Transfer on Death Plan because an authorized party, usually your executor, must identify the members of the group after your death. If you don’t plan to have an estate that will go through probate and don’t have an executor, there may be no
authorized party who can act on behalf of your estate to identify your descendants or other members of another group of beneficiaries.



http://www.vanguard.com/pdf/bdbp.pdf?2210039149


Vanguard allowed me use the form "John Doe per stirpes"

I recently went through a process with Vanguard regarding the use of the "per stirpes" provision with my IRA accounds, and tadamsmar helped clue me in on that. Now I see from Steelersfan that beneficiary designations for non-IRA accounts Transfer on Death Plan seems to be a different can of worms; wherein they don't accept the "per stirpes" provision at all. Just when I thought I understood this stuff. Frankly, I don't know why they accept it for IRA accounts but not for taxable accounts. Seems like the same issues would prevail for both - what am I missing here?


It wasn't a big deal for me since I have various other assets that I needed a will to handle.

I have one modest account at American Funds and they work exactly the same way. On a taxable account you can only specify specific names and percentages on the TOD form, no "per stirpes".
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby rustymutt » Fri Feb 08, 2013 9:44 pm

Yes, you do want a will/trust.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby Default User BR » Sat Feb 09, 2013 2:22 am

artthomp wrote:However, my lwife had inhertied a farm in Oklahoma and unless we immediately transferred owneeship to our children the only practical way to arrange the transfer of this property after our deaths was through a trust.

Oklahoma allows beneficiary deeds. Would that not have served?


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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby tadamsmar » Sat Feb 09, 2013 7:43 am

Browser wrote:
tadamsmar wrote:
Steelersfan wrote:I designated beneficiaries on my Vanguard IRA account but am using a will for my non-IRA accounts. This restriction (from the Vanguard form) was too restrictive for me:


You can’t name a group of individuals, such as “my descendants” or “children, per stirpes,” as your beneficiaries for a Transfer on Death Plan because an authorized party, usually your executor, must identify the members of the group after your death. If you don’t plan to have an estate that will go through probate and don’t have an executor, there may be no
authorized party who can act on behalf of your estate to identify your descendants or other members of another group of beneficiaries.



http://www.vanguard.com/pdf/bdbp.pdf?2210039149


Vanguard allowed me use the form "John Doe per stirpes"

I recently went through a process with Vanguard regarding the use of the "per stirpes" provision with my IRA accounds, and tadamsmar helped clue me in on that. Now I see from Steelersfan that beneficiary designations for non-IRA accounts Transfer on Death Plan seems to be a different can of worms; wherein they don't accept the "per stirpes" provision at all. Just when I thought I understood this stuff. Frankly, I don't know why they accept it for IRA accounts but not for taxable accounts. Seems like the same issues would prevail for both - what am I missing here?


Here's a possibility: If an IRA (or other tax-deferred account) goes to the estate then the RMD is based on a standard 5 years draw-down period. If the IRA goes to an individual then the age of the individual determines the RMD (assuming the inheritance paperwork is done correctly). With a taxable account, there is no tax-deferred status to preserve, so allowing it to go to the estate is not such a big deal. The result is that having "per stirpes" available is more important for IRAs beneficiary designations, since everyone should be avoiding it going to the estate or a simple trust. (I think there are complex trusts that will work OK for IRAs.)

But the TOD paperwork says no "my children, per stirpes", so maybe "Jane Doe, per stirpes" is allowed. Not sure. Might be worth asking. I did not submit a TOD form.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby artthomp » Sat Feb 09, 2013 10:05 am

Default User BR wrote:
artthomp wrote:However, my lwife had inhertied a farm in Oklahoma and unless we immediately transferred owneeship to our children the only practical way to arrange the transfer of this property after our deaths was through a trust.

Oklahoma allows beneficiary deeds. Would that not have served?


Brian


I was told this did not appear to be the case by my Missouri lawyer after correspondence with my Oklahoma lawyer. I also noted elsewhere that a trust was one of the most convenient vehicles for transferring out of state property.

At any rate, I am pleased with the benefits of using a trust since it allows all non-IRA assets to be treated the same without going through probate.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby Browser » Sat Feb 09, 2013 11:14 am

Let's say that you have a "John Doe, per stirpes" beneficiary designation on your IRA account at Vanguard. Does anyone know what the actual mechanics are when you die? I'm assuming that John Doe needs to notify Vanguard within some designated period of time following your death. Does John Doe have to provide a death certificate at time of contact, or does Vanguard send some paperwork to John Doe to be completed and returned with death certificate? If John Doe predeceases you, then does one of the "per stirpes" beneficiaries have to contact Vanguard? What has to be provided to Vanguard to establish who the beneficiaries are if there are more than one? Does Vanguard have any obligation to find/locate any of the beneficiaries or is the burden on the beneficiaries themselves? Lots of questions.
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Re: Do we need a Will/Trust if all assets at Vanguard ?

Postby tadamsmar » Sat Feb 09, 2013 2:46 pm

Browser wrote:Let's say that you have a "John Doe, per stirpes" beneficiary designation on your IRA account at Vanguard. Does anyone know what the actual mechanics are when you die? I'm assuming that John Doe needs to notify Vanguard within some designated period of time following your death. Does John Doe have to provide a death certificate at time of contact, or does Vanguard send some paperwork to John Doe to be completed and returned with death certificate? If John Doe predeceases you, then does one of the "per stirpes" beneficiaries have to contact Vanguard? What has to be provided to Vanguard to establish who the beneficiaries are if there are more than one? Does Vanguard have any obligation to find/locate any of the beneficiaries or is the burden on the beneficiaries themselves? Lots of questions.


I am pretty sure that the beneficiaries or their guardians have to contact Vanguard.

Some of your questions answered here:

https://retirementplans.vanguard.com/VG ... Spouse.jsf

I have some instructions to my primary or contingent executors in my lock box on the matter that will help ensure things get done correctly. There are pitfalls in the process:

http://online.wsj.com/article/SB1000142 ... 26916.html
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