Consolidation of Vanguard accounts after getting married

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2m2037
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Consolidation of Vanguard accounts after getting married

Post by 2m2037 » Fri Dec 22, 2017 11:30 am

Hello.

(To make this concise)

About 8 months ago I started on my personal 3-fund portfolio journey. Half a year later, I set up a joint account for my wife (then fiancee) and I with the aim of incorporating the 3-fund theory into our joint finances as well.

At this point I have in my personal account approx $13K in Total US admiral fund, $13K in Total International admiral fund.
In the joint account we have approx $5K in a 2055 retirement fund and $6K in Total Bond Investor fund.

I would like to consolidate everything in one account for ease of use (ideally move the funds in my account into the joint account). Are there any tax issues I should consider? I'm thinking there might possibly be some tax payable on gains (not capital gains) on:
1. if I exchange the funds in my personal account for the exact same funds in the joint account, since I'm theoretically selling and re-buying
2. if I exchange the 2055 retirement account to a mix of Total US, Total International, Total Bond

Am I correct/wrong? Our combined annual income is approximately 200k/year if that makes a difference.

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Tyler Aspect
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Re: Consolidation of Vanguard accounts after getting married

Post by Tyler Aspect » Fri Dec 22, 2017 1:27 pm

I think I would advocate to maintain the individual accounts, as well as the joint accounts.

Keep in mind that with the joint account any one person may decide to drain the account if the relationship goes bust. Not saying it will occur, but in my opinion it is a bit too drastic to only have joint accounts. It may be a good idea to periodically sweep equal amounts to the individual accounts for "long term individual savings".

In case there is incoming inheritance money, having individual accounts would make it straight forward to deposit to the correct account.
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Yankuba
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Re: Consolidation of Vanguard accounts after getting married

Post by Yankuba » Fri Dec 22, 2017 1:39 pm

Tyler Aspect wrote:
Fri Dec 22, 2017 1:27 pm
I think I would advocate to maintain the individual accounts, as well as the joint accounts.

Keep in mind that with the joint account any one person may decide to drain the account if the relationship goes bust. Not saying it will occur, but in my opinion it is a bit too drastic to only have joint accounts. It may be a good idea to periodically sweep equal amounts to the individual accounts for "long term individual savings".

In case there is incoming inheritance money, having individual accounts would make it straight forward to deposit to the correct account.
+1

Keep the accounts separate - in case the worst happens you don't want your spouse liquidating your assets to run off with a new lover. And it is important not to comingle inheritances.

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Kenkat
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Re: Consolidation of Vanguard accounts after getting married

Post by Kenkat » Fri Dec 22, 2017 2:15 pm

You should just be able to retitle the accounts as joint accounts without needing to sell any securities.

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badbreath
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Re: Consolidation of Vanguard accounts after getting married

Post by badbreath » Fri Dec 22, 2017 2:54 pm

Remember what IRA stands for Individual Retirement Account. There is no JRA (Joint Retirement account) so you will have a IRA and your spouse will have a IRA.
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2m2037
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Re: Consolidation of Vanguard accounts after getting married

Post by 2m2037 » Fri Dec 22, 2017 3:39 pm

Thanks for the responses all. Call me naive, but I respectfully submit that beginning a relationship/marriage with optimism is half the battle won. In any case, DW and I have discussed the merits/cons of joint finances and we've reached a comfortable decision as to the financial framework of our marriage.

Wrt inheritances, we still keep separate checking/savings accounts and don't expect to inherit shares/bonds. Thanks for bringing that up, that is not something we had thought about.
Kenkat wrote:
Fri Dec 22, 2017 2:15 pm
You should just be able to retitle the accounts as joint accounts without needing to sell any securities.
But then wouldn't we have 2 joint accounts? My goal is to eliminate one of the accounts and maintain all 3 (or 4) funds under one account. Or perhaps I'm misunderstanding your suggestion and if I retitle the accounts, they will automatically get consolidated into 1 joint account :confused
badbreath wrote:
Fri Dec 22, 2017 2:54 pm
Remember what IRA stands for Individual Retirement Account. There is no JRA (Joint Retirement account) so you will have a IRA and your spouse will have a IRA.
Thanks, I should have mentioned these are regular brokerage accounts and not IRA accounts.

dbr
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Re: Consolidation of Vanguard accounts after getting married

Post by dbr » Fri Dec 22, 2017 3:44 pm

I am somewhat certain the broker can merge the accounts. Call them and tell them what you want.

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Kenkat
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Re: Consolidation of Vanguard accounts after getting married

Post by Kenkat » Fri Dec 22, 2017 3:46 pm

dbr wrote:
Fri Dec 22, 2017 3:44 pm
I am somewhat certain the broker can merge the accounts. Call them and tell them what you want.
Yes, I am pretty sure they can be merged if the registration on the two accounts is identical.

jryan
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Re: Consolidation of Vanguard accounts after getting married

Post by jryan » Fri Dec 22, 2017 6:04 pm

Congratulations on your marriage. May there be many years of happiness!

Have you considered what should happen to the accounts in the event of one or both of you passing?

Since the accounts are at Vanguard, you may find that your transfer on death (TOD) options may be limited for a joint account.

Searching this site for "Vanguard joint account transfer on death" should return a number of discussions that you may want to explore before consolidating accounts.

You can control access (Information-Only/Limited Agent Authorization) to your accounts via My Accounts -> Service options checklist -> Grant access to your account and change account ownership via My Accounts -> Account maintenance -> Account ownership.

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2m2037
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Re: Consolidation of Vanguard accounts after getting married

Post by 2m2037 » Fri Dec 22, 2017 6:26 pm

jryan wrote:
Fri Dec 22, 2017 6:04 pm
Congratulations on your marriage. May there be many years of happiness!

Have you considered what should happen to the accounts in the event of one or both of you passing?

Since the accounts are at Vanguard, you may find that your transfer on death (TOD) options may be limited for a joint account.

Searching this site for "Vanguard joint account transfer on death" should return a number of discussions that you may want to explore before consolidating accounts.

You can control access (Information-Only/Limited Agent Authorization) to your accounts via My Accounts -> Service options checklist -> Grant access to your account and change account ownership via My Accounts -> Account maintenance -> Account ownership.
Thank you for the well wishes and the information. That was also not something we had thought of and we'll look into it. :beer

Topic Author
2m2037
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Re: Consolidation of Vanguard accounts after getting married

Post by 2m2037 » Fri Dec 22, 2017 6:50 pm

Well, an update for anyone who might have the same question in the future. I called Vanguard and they advised that if it was an exchange from one fund under my personal account to the identical fund in the joint account, it wouldn't be considered a sale and purchase and wouldn't be considered a taxable transaction. :)

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