Vanguard Beneficiary Form Question (Child's Trust)

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oneleaf
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Vanguard Beneficiary Form Question (Child's Trust)

Post by oneleaf » Thu Nov 09, 2017 2:59 am

I have a young daughter and my will designates that a trust be created for her upon our deaths and assets held until she reaches a certain age.

On Vanguard's Beneficiary Form, one of the options is a Trust, where I can click the button that says "To the trustee of a trust created under my last will". It then asks to enter the name of the trust or section of will.

What is the best practice for this? My will was done by Nolo Willmaker. In the paragraph describing the trust, it refers to the "Jane Mary Doe trust" (replace the name with my daughter's name). Should I simply put in "Jane Mary Doe trust" in the field on the Vanguard form? Or should I put in the section of the will, i.e. "Part 6. Individual Child's Trust".

Curious how others have done this. I only have one child so there is only one trust. Not sure if that makes this easier.

Thanks!

dbr
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Re: Vanguard Beneficiary Form Question (Child's Trust)

Post by dbr » Thu Nov 09, 2017 10:26 am

oneleaf wrote:
Thu Nov 09, 2017 2:59 am
I have a young daughter and my will designates that a trust be created for her upon our deaths and assets held until she reaches a certain age.

On Vanguard's Beneficiary Form, one of the options is a Trust, where I can click the button that says "To the trustee of a trust created under my last will". It then asks to enter the name of the trust or section of will.

What is the best practice for this? My will was done by Nolo Willmaker. In the paragraph describing the trust, it refers to the "Jane Mary Doe trust" (replace the name with my daughter's name). Should I simply put in "Jane Mary Doe trust" in the field on the Vanguard form? Or should I put in the section of the will, i.e. "Part 6. Individual Child's Trust".

Curious how others have done this. I only have one child so there is only one trust. Not sure if that makes this easier.

Thanks!
I would probably ask the attorney who drafted your will. No, just read you didn't use an attorney, right? I personally tend to be more comfortable having an attorney for things like this. Our attorney has always been most helpful answering simple questions that come up without charging anything, and questions do come up from time to time.

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oneleaf
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Re: Vanguard Beneficiary Form Question (Child's Trust)

Post by oneleaf » Thu Nov 09, 2017 11:38 am

Yea, we would consider hiring an attorney, but since we don't have one, I was hoping this is a simple matter that I can do myself. Curious how others have done their beneficiary forms, with simple Nolo or Legalzoom wills with trusts?

fourwheelcycle
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Re: Vanguard Beneficiary Form Question (Child's Trust)

Post by fourwheelcycle » Thu Nov 09, 2017 11:43 am

We have a trust that specifies the disposition of our assets under alternative scenarios, e.g, one or more of our (adult) children die before or at the same time as us, with or without surviving minor or adult children of their own, etc.

Our Vanguard taxable account is in the name of our trust, so there is no beneficiary. For our retirement accounts at TIAA, Fidelity, and Vanguard, our attorney prepared a custom beneficiary form which says our spouse is the primary beneficiary and our children, in equal shares, are the secondary beneficiaries. The custom form then goes into the same type of detail in our trust in the event one or more of our children die before or at the same time as us, leaving no children or adult or minor children.

TIAA and Vanguard accepted our custom beneficiary form. Fidelity would not accept it, so we just said spouse primary and children secondary, in equal shares.

bsteiner
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Re: Vanguard Beneficiary Form Question (Child's Trust)

Post by bsteiner » Thu Nov 09, 2017 11:46 am

What if your daughter predeceases you?

We usually fill in "See attached rider" and then attach a rider with the specific provisions. In this case, that would include who would get the IRA if your daughter doesn't survive you.

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oneleaf
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Re: Vanguard Beneficiary Form Question (Child's Trust)

Post by oneleaf » Thu Nov 09, 2017 11:53 am

bsteiner wrote:
Thu Nov 09, 2017 11:46 am
What if your daughter predeceases you?

We usually fill in "See attached rider" and then attach a rider with the specific provisions. In this case, that would include who would get the IRA if your daughter doesn't survive you.
I suppose the IRA would just go to my estate, and the court would decide where it goes to. At this moment, my will only covers my spouse with my daughter as contingent. I was hoping that I could then set my IRA beneficiaries according to Vanguard's boilerplate, designating the trust. If I ever wanted to include a more complex estate plan, I would feel more comfortable hiring a lawyer. But at the moment, I was hoping I could just fill out the "trust" portion of the beneficiary form to the trustee as determined by my will.

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oneleaf
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Re: Vanguard Beneficiary Form Question (Child's Trust)

Post by oneleaf » Thu Nov 09, 2017 12:34 pm

I was initially hoping this was a simple question with a simple solution, since I only have one child and one trust created under my will. I apologize if I really should be looking for an estate lawyer, but I was hoping there are plenty of DIY'ers and this is a fairly routine question? If not, please tell me why this could result in a bad situation for my daughter, and whether I really should be seeing a lawyer.

In my Nolo Willmaker Will, this is what section 6 states:
Nolo Willmaker Will wrote: Part 6. Individual Child's Trust

A. Beneficiaries and Trustees

All property left in this will to <Daughter's Name> shall be held in a separate trust for <Daughter's Name> until she reaches age 33. The trustee of the <Daughter's Name> trust shall be <Trustee's Name>. If <Trustee's Name> is unwilling or unable to serve, the trustee shall be <Alternate Trustee's Name>.
On Vanguard's Beneficiary Form, it has this following section I can click:
Vanguard's Beneficiary Form wrote: To the trustee of a trust created under my last will

Name of trust or section of will:
Which of the following should I do?

Name of trust or section of will: <Daughter's Name> trust
Name of trust or section of will: Part 6. Individual Child's Trust

Thanks again!

bsteiner
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Re: Vanguard Beneficiary Form Question (Child's Trust)

Post by bsteiner » Thu Nov 09, 2017 1:31 pm

oneleaf wrote:
Thu Nov 09, 2017 12:34 pm
I was initially hoping this was a simple question with a simple solution, since I only have one child and one trust created under my will. I apologize if I really should be looking for an estate lawyer, but I was hoping there are plenty of DIY'ers and this is a fairly routine question? If not, please tell me why this could result in a bad situation for my daughter, and whether I really should be seeing a lawyer.

In my Nolo Willmaker Will, this is what section 6 states:
Nolo Willmaker Will wrote: Part 6. Individual Child's Trust

A. Beneficiaries and Trustees

All property left in this will to <Daughter's Name> shall be held in a separate trust for <Daughter's Name> until she reaches age 33. The trustee of the <Daughter's Name> trust shall be <Trustee's Name>. If <Trustee's Name> is unwilling or unable to serve, the trustee shall be <Alternate Trustee's Name>.
...
There are some special requirement for trusts that receive IRA benefits in order to qualify for the stretch. See my article on this in the May 2004 issue of BNA Tax Management's Estates, Gifts & Trusts Journal: https://www.elderlawanswers.com/Documen ... nefits.pdf. Does this trust meet those requirements?

If it does, then by having only one trust, you would be subjecting the other assets to those requirements. Do you want to do that?

What happens when she reaches 33? If you force the trust assets to be distributed to her, they'll be included in her estate for estate tax purposes, and they'll be subject to her creditors and spouses.

What happens if she's already over 33 at the time of your death? How would the IRA go in that case?

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oneleaf
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Re: Vanguard Beneficiary Form Question (Child's Trust)

Post by oneleaf » Thu Nov 09, 2017 2:38 pm

At this point, since my daughter is only 2, I am primarily interested in designating guardianship for her.

I know I don't have a perfect plan. But I didn't want to have to hire a lawyer for this. And as I am traveling in a few days, I can either shred my will and make a new one (with a UTMA if that is less likely to have adverse consequences), or designate my beneficiary to the testamentary trust correctly at Vanguard. At this point, what should I do?

My will currently designates a trust be created for my daughter. Before she reaches 33, I will definitely have redone my will, so I am really just interested in guardianship for her with my will.

My Vanguard beneficiary form has "to my descendants who survive me per stirpes" as secondary beneficiary. I was hoping to designate the trust created in my will as beneficiary but this thread is starting to indicate that this is more complicated than I thought it would be.

So...

1. I can shred my will. Redo the will with a UTMA (in Oregon this can be effective until she is 25).
2. OR, instead of the above, leave the will as-is. But do not use the testamentary trust for the IRA's and simple do step 3:
3. Change my Vanguard beneficiary to name her outright instead of "to my descendants". We only have one child and don't plan on another.

I expect a named beneficiary who is a minor will be easy for Vanguard to deal with (they would set it up as a custodial account).

I can do a more perfect plan sometime in the future. But I am interested in making the least mistakes with this and I want to get it done without a lawyer. I know I should be worried about her estate (spouses, creditors, estate tax, etc), but my primary goal for my will is guardianship designation and if I can get our assets to her with a UTMA (knowing it goes to her outright at 25), I would be happy with that.

If I can leave my will as is (with the testamentary trust), I would be even happier, but if there is possibility of adverse consequences, I will rewrite it with a UTMA.

Thanks!

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