Vanguard joint taxable account questions

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Shamrock71
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Joined: Fri May 05, 2017 11:38 am

Vanguard joint taxable account questions

Postby Shamrock71 » Sun Jun 18, 2017 11:27 am

I opened an individual brokerage account at Vanguard a month or so ago. My wife also wants to invest in a taxable account, so I'm considering making my account a joint account. Our taxable would be for retirement (20+ years away).

The reason I'm considering a taxable account is that I'll be the one managing our retirement portfolio, so I think it would be easier to have 1 joint taxable account. It would also streamline our holdings in case I wanted to do some TLH in the future. I'm aware of wash sale rules.

That said, here are my questions:

1. Does a joint taxable account simplify or complicate tax preparation (we file jointly)?

2. Will we be able to clearly see who contributes how much to the joint taxable account?
For example, can we see what linked bank account is being used for each buy?
We both want this transparency so we can see how much we are each contributing every year.

3. We don't live in a community property state. We live in a equitable distribution state.
Should this impact our decision to do a joint taxable account?
(No, we are not planning on divorcing. We just want to have a complete picture.)

4. Does a joint account make survivorship easier?

5. If, at any time, we wanted to turn the joint account into 2 individual accounts, is this easy to do?
Does it involve selling and rebuying if the funds remain the same?
Would it have any negative financial impacts?

6. Would it be easy to change my individual Vanguard brokerage account into a joint account?
If so, what are the basic steps?
I know I can call Vanguard for the details. I just wanted some feedback.

7. Is there anything else we should consider when creating a joint taxable account?

Thanks in advance for any help.

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ruralavalon
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Location: Illinois

Re: Vanguard joint taxable account questions

Postby ruralavalon » Sun Jun 18, 2017 11:45 am

Shamrock71 wrote:I opened an individual brokerage account at Vanguard a month or so ago. My wife also wants to invest in a taxable account, so I'm considering making my account a joint account. Our taxable would be for retirement (20+ years away).

The reason I'm considering a taxable account is that I'll be the one managing our retirement portfolio, so I think it would be easier to have 1 joint taxable account. It would also streamline our holdings in case I wanted to do some TLH in the future. I'm aware of wash sale rules.

That said, here are my questions:

1. Does a joint taxable account simplify or complicate tax preparation (we file jointly)?

No difference that I am aware of.

Hhamrock71 wrote:2. Will we be able to clearly see who contributes how much to the joint taxable account?
For example, can we see what linked bank account is being used for each buy?
We both want this transparency so we can see how much we are each contributing every year.

No, you will have to track that yourselves if that is important for some reason.

Shamrock71 wrote:3. We don't live in a community property state. We live in a equitable distribution state.
Should this impact our decision to do a joint taxable account?
(No, we are not planning on divorcing. We just want to have a complete picture.)

I don't believe this affects the decision.

Shamrock71 wrote:4. Does a joint account make survivorship easier?

Yes. This is a reason we have a joint account.

Shamrock71 wrote:5. If, at any time, we wanted to turn the joint account into 2 individual accounts, is this easy to do?

Does it involve selling and rebuying if the funds remain the same?
Would it have any negative financial impacts?
I think it would involve selling and rebuying, with income tax liability.

6. Would it be easy to change my individual Vanguard brokerage account into a joint account?
If so, what are the basic steps?
I know I can call Vanguard for the details. I just wanted some feedback.

I don't know.
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livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Vanguard joint taxable account questions

Postby livesoft » Sun Jun 18, 2017 11:54 am

We have transferred shares out of our joint taxable Vanguard account to our child. The shares retain the same purchase date and cost basis. Was it easy? Well, Vanguard has a form that required a Medallion Signature Guarantee since the other account did not have the same "registration", but we didn't have to sell anything.

So I don't think if you wanted to transfer (gift) shares in-kind to any other account including individual accounts for you or your spouse that you would have to sell and re-buy.
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dbr
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Re: Vanguard joint taxable account questions

Postby dbr » Sun Jun 18, 2017 12:08 pm

Shamrock71 wrote:I opened an individual brokerage account at Vanguard a month or so ago. My wife also wants to invest in a taxable account, so I'm considering making my account a joint account. Our taxable would be for retirement (20+ years away).

The reason I'm considering a taxable account is that I'll be the one managing our retirement portfolio, so I think it would be easier to have 1 joint taxable account. It would also streamline our holdings in case I wanted to do some TLH in the future. I'm aware of wash sale rules.

That said, here are my questions:

1. Does a joint taxable account simplify or complicate tax preparation (we file jointly)?

I am not sure what one calls complicate. Separate accounts generate more entries on some forms and require acquiring and tabulating a larger number of tax documents and reports. I personally would not call this "more complicated."

2. Will we be able to clearly see who contributes how much to the joint taxable account?
For example, can we see what linked bank account is being used for each buy?
We both want this transparency so we can see how much we are each contributing every year.

A good reason to have separate accounts is being able to get separate accountings. Of course, you can track this yourself if you want. I am thinking you can't see what account was used for each buy past perhaps the confirmation for the individual transaction. I might be mistaken.

3. We don't live in a community property state. We live in a equitable distribution state.
Should this impact our decision to do a joint taxable account?
(No, we are not planning on divorcing. We just want to have a complete picture.)

Separate accounts might be strongly advised if there are large sources of funds that are extramarital, such as one person receiving an inheritance.

4. Does a joint account make survivorship easier?

I think yes and no. The survivor can access the joint account more easily than an account of the deceased, but the survivor will not have to mess around at all gaining access to accounts that had always been their own. I am inclined to think the latter is not a bad idea.

5. If, at any time, we wanted to turn the joint account into 2 individual accounts, is this easy to do?
Does it involve selling and rebuying if the funds remain the same?
Would it have any negative financial impacts?

I can't imagine having to make taxable transactions and I think gift concerns are moot between spouses. It would not surprise me if the mechanism is to open new accounts and close the old one. Obviously at least one new account would have to be opened.

6. Would it be easy to change my individual Vanguard brokerage account into a joint account?
If so, what are the basic steps?
I know I can call Vanguard for the details. I just wanted some feedback.

7. Is there anything else we should consider when creating a joint taxable account?

If there are family complications such as blended families, potential or actually received inheritances, and thoughts about your estate, I would consult an estate attorney for your specific situation. A classic dilemma is a spouse not wanting her money to go to a successor wife and not her own children after her own demise or devorce (or whatever tangled picture one might concoct).

Thanks in advance for any help.

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Kevin M
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Re: Vanguard joint taxable account questions

Postby Kevin M » Sun Jun 18, 2017 12:17 pm

ruralavalon wrote:
Hhamrock71 wrote:2. Will we be able to clearly see who contributes how much to the joint taxable account?
For example, can we see what linked bank account is being used for each buy?
We both want this transparency so we can see how much we are each contributing every year.

No, you will have to track that yourselves if that is important for some reason.

I just checked one of my buys funded from an externally linked bank account, and I can indeed see the bank info, including bank name, last four digits of account number, and bank owner name. However, to view this you must click on the transaction in your transaction history to see the transaction details, so it's not particularly convenient.

Another thing you could do if this tracking is worth sacrificing some convenience is to use two different money market funds (or short-term bond funds or whatever), with each of you making your contributions to one or the other of them. For example, one of you use Prime MM and the other use Tax-exempt MM. Of course this requires the additional step of doing a second transaction to buy whatever stock or bond fund with proceeds from the MMF.

There are variations on this idea, like maybe one of you always buys shares of your US stock fund and the other always buys shares of your international stock and bond funds.

But maybe if keeping track of each spouse's contributions is that important, you should just stick with individual accounts. A joint account makes things really easy in the event of the death of one spouse, since the surviving spouse then becomes the sole owner of the account, but you also can set up a Transfer On Death plan for an individual account. The main purpose of a TOD plan is to avoid probate. The TOD transfer will involve a bit more than with a joint account, since you'll have to provide a death certificate, and complete a change of ownership process, but it's a lot simpler than probate (how much simpler depends on the state you live in).

Kevin
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jhfenton
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Re: Vanguard joint taxable account questions

Postby jhfenton » Sun Jun 18, 2017 1:22 pm

There's no reason you can't have two joint accounts if you want ease of joint management and survivorship. Vanguard doesn't mind. :beer One of you can primarily fund one joint account and the other can fund the other. They would be easy to combine later if you decided to do so, since they would have the same titling.


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