Per Stirpes

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vest74
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Per Stirpes

Post by vest74 » Fri Jan 19, 2018 12:48 pm

I see Vanguard does not allow per stirpes in taxable account. I wonder if I/we could enter small percentages for our grandchildren to insure against a "per capita" settlement of the Vanguard, Ed Jones TOD's, and the Nationwide 457(b)(Nationwide also, like Vanguard does not allow per stirpes). Or perhaps just let these accounts pass to the will which in turn has per stirpes clauses?

I/we don't want a trust because there are enough assets to pass immediately and have been told State of Indiana has a fairly quick and inexpensive Probate.

Any thoughts appreciated.....

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BolderBoy
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Re: Per Stirpes

Post by BolderBoy » Fri Jan 19, 2018 1:29 pm

vest74 wrote:
Fri Jan 19, 2018 12:48 pm
I see Vanguard does not allow per stirpes in taxable account. I wonder if I/we could enter small percentages for our grandchildren to insure against a "per capita" settlement of the Vanguard, Ed Jones TOD's, and the Nationwide 457(b)(Nationwide also, like Vanguard does not allow per stirpes). Or perhaps just let these accounts pass to the will which in turn has per stirpes clauses?
I guess I don't understand your question.

VG allows you to set up the taxable account with beneficiaries (BOD). Can't you adjust the % amounts there, for what you want to go to whom?
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

vest74
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Re: Per Stirpes

Post by vest74 » Fri Jan 19, 2018 2:15 pm

VG allows you to set up the taxable account with beneficiaries (BOD). Can't you adjust the % amounts there, for what you want to go to whom?


I guess my answer to you is a question: can i list as beneficiaries 3 children 27% each and 6 grandchildren 3% each? just wondering if there was an easier way because some of the grandchildren could be minors and that is another issue.


Example: Roth or Traditional IRA at Vanguard allows me to give 1/3 to my daughter per stirpes - that means if she passed her 1/3 would go to her children and not her husband or her other brother and sister( i have a total of 3 children and 6 grandchildren). In the Taxable account, no per stirpes allowed so 1/3 to each child of mine, then if my daughter passes her share would be divided between my other 2 children 50% each - not to passed daughters children(my grandchildren) as i want ..........

bsteiner
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Re: Per Stirpes

Post by bsteiner » Fri Jan 19, 2018 3:01 pm

vest74 wrote:
Fri Jan 19, 2018 12:48 pm
I see Vanguard does not allow per stirpes in taxable account. I wonder if I/we could enter small percentages for our grandchildren to insure against a "per capita" settlement of the Vanguard, Ed Jones TOD's, and the Nationwide 457(b)(Nationwide also, like Vanguard does not allow per stirpes). Or perhaps just let these accounts pass to the will which in turn has per stirpes clauses?

I/we don't want a trust because there are enough assets to pass immediately and have been told State of Indiana has a fairly quick and inexpensive Probate.
...
If probating a Will is not difficult in Indiana, then why not just let your Will dispose of your assets (other than your life insurance and retirement benefits)? That will make it easier to get your debts, taxes and expenses paid (especially if a child has predeceased). It will also make it easier to provide for beneficiaries in trust rather than outright if desired.

vest74
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Re: Per Stirpes

Post by vest74 » Fri Jan 19, 2018 5:47 pm

I wrote that as a possible solution in my original post:
"Or perhaps just let these accounts pass to the will which in turn has per stirpes clauses?"

I was just hoping there was a less messy and more private way than the courts :| ? Seems that these taxable accounts would have a better way........... :annoyed

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HueyLD
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Re: Per Stirpes

Post by HueyLD » Fri Jan 19, 2018 5:53 pm

I wonder why Vanguard allows "per stirpes" for IRAs, but not taxable accounts? Did your rep explain that to you?

Maybe Fidelity can accommodate your request.

c1over8
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Re: Per Stirpes

Post by c1over8 » Fri Jan 19, 2018 6:07 pm

vest74 wrote:
Fri Jan 19, 2018 2:15 pm
I guess my answer to you is a question: can i list as beneficiaries 3 children 27% each and 6 grandchildren 3% each? just wondering if there was an easier way because some of the grandchildren could be minors and that is another issue.
The first problem with this is that you would still be intestate as to 1%. (27+27+27+3+3+3+3+3+3=99) The second problem is that if one child predeceases you, his/her share is not going to his/her kids, but rather being redistributed among the other takers (other two kids, 6 grandchildren and 1% intestate share), with the bulk going to the other 2 children. So this is not the per stirpes distribution you are looking for.
vest74 wrote:
Fri Jan 19, 2018 5:47 pm
have been told State of Indiana has a fairly quick and inexpensive Probate.
vest74 wrote:
Fri Jan 19, 2018 5:47 pm
I was just hoping there was a less messy and more private way than the courts :| ? Seems that these taxable accounts would have a better way........... :annoyed
Your descriptions of the probate process seem a little contradictory. The less messy more private way is through a trust. It may or may not be more expensive depending on the cost to have a trust drafted vs. the probate fees. In my state it is not the probate tax that is expensive, but rather the probate tax PLUS the fees for the required reporting when a will is probated that winds up often being more expensive than having a trust drafted.

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FIREchief
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Re: Per Stirpes

Post by FIREchief » Fri Jan 19, 2018 6:22 pm

HueyLD wrote:
Fri Jan 19, 2018 5:53 pm
I wonder why Vanguard allows "per stirpes" for IRAs, but not taxable accounts? Did your rep explain that to you?

Maybe Fidelity can accommodate your request.
Fidelity allows a per stirpes designation on all beneficiary designations, both primary and contingent for retirement, HSA and after-tax accounts.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

vest74
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Re: Per Stirpes

Post by vest74 » Fri Jan 19, 2018 7:00 pm

"Your descriptions of the probate process seem a little contradictory. The less messy more private way is through a trust. It may or may not be more expensive depending on the cost to have a trust drafted vs. the probate fees. In my state it is not the probate tax that is expensive, but rather the probate tax PLUS the fees for the required reporting when a will is probated that winds up often being more expensive than having a trust drafted".

Yes a bit contradictory, but no child wanted to deal with other so steered away from a trust. yes i know did not = 100% did not want to take the time to write out 33.3% 33.34% etc (i am a slow typer)

Also I/we both know that if any of the 3 children died we would need to change the beneficiaries.

I believe that Vanguard and others like Nationwide do not do per stirpes because they are not in the business of chasind down generations and large #'s of beneficiaries.

Just trying to figure the best way.................

mariezzz
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Re: Per Stirpes

Post by mariezzz » Fri Jan 19, 2018 7:41 pm

I was told by a friend who is an estate planning attorney that you can simply write a person's name then add "per stirpes" after it in the beneificiary box for any account (taxable or not). However, now I'm wondering whether this is true with Vanguard. That may affect where I keep some of my money.
I don't want their "descendants per stirpes". I want to name an individual and if that individual pre-deceases me, have it go to her children, per stirpes.

If Vanguard doesn't allow this, this is a really a negative aspect of using Vanguard, and they need to reconsider. Their argument (below) for disallowing is just silly. I'd be happy to say something like "person X; per stirpes to Y & Z" if they're concerned about identifying the "per stirpes".

People may find this "transfer on death" kit useful (for non-retirement accounts): https://www.vanguard.com/pdf/bdbp.pdf?2210039149
Vanguard doesn’t accept designations that name a group of individuals, such as “my descendants” or “children, per stirpes,” on a Transfer on Death Plan because of the difficulty in identifying the members of the group after your death. We’d look to an authorized party, such as your executor, to verify the correct members of the group. If you don’t plan to leave an estate that will go through probate and don’t have an executor, there may be no authorized party who can act on your estate’s behalf to identify your beneficiaries.
Note that Vanguard has no obligation to locate your beneficiaries or inform them of their status.
That's interesting - it should be no more difficult to handle the per stirpes for TOD plans than it is for retirement accounts. I wonder why they won't handle it? Does some federal law require them to allow it on retirement accounts?

Edit to add this link: https://investor.vanguard.com/beneficiaries/iras
This is interesting advice: Vanguard says "... consider designating your beneficiaries by their relationships to you. For example, you can leave your IRA "to the person I am married to at the time of my death."
Last edited by mariezzz on Fri Jan 19, 2018 8:28 pm, edited 1 time in total.

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FIREchief
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Re: Per Stirpes

Post by FIREchief » Fri Jan 19, 2018 8:26 pm

I would never rely on anything VG comes up with wrt beneficiaries. Their archaic beneficiary policies are the primary reason I no longer have any accounts at VG. YMMV.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

c1over8
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Re: Per Stirpes

Post by c1over8 » Fri Jan 19, 2018 9:15 pm

vest74 wrote:
Fri Jan 19, 2018 7:00 pm
"Also I/we both know that if any of the 3 children died we would need to change the beneficiaries.
Do you both have POAs? If you become incapacitated or incompetent do the agents you've named know this would need to do be done? What if you, your spouse, and a child pass in a common accident? You don't have to worry about these issues if the account flows through your will or trust.

vest74
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Re: Per Stirpes

Post by vest74 » Fri Jan 19, 2018 11:28 pm

yes, we both have wills and poa's, health poa's etc. only prob is our grandchildren if not allowed per stirpes in these taxable accounts..........

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HueyLD
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Re: Per Stirpes

Post by HueyLD » Sat Jan 20, 2018 9:30 am

If per stirpes is very important to you and you do not want a trust, then move your taxable money out of Vanguard into Fidelity.

vest74
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Re: Per Stirpes

Post by vest74 » Sat Jan 20, 2018 10:35 am

then move the ed jones, then move the nationwide............... :annoyed

vest74
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Re: Per Stirpes

Post by vest74 » Sat Jan 20, 2018 1:22 pm

Ok, thanks all! consensus says, let it go to will and be probated, do a trust, or move it out of Vanguard after 25+ yrs. :| :|

vest74
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Re: Per Stirpes

Post by vest74 » Thu Feb 01, 2018 7:09 pm

Wait, maybe an epiphany :happy I think i found a somewhat acceptable answer to all accounts where i have no "per stirpes" designation available for a secondary beneficiary: It looks as if Edward Jones, Nationwide 457(b) Plan, and Vanguard Brokerage will allow our Taxable Joint Account (JWROS) to have a TOD associated with it and the WILL/ESTATE can be named as secondary beneficiary, or we just name our children(3) say at 27% and the Grandchildren(6) at like 3% each as secondary beneficiaries ? This is an option, however not quite as precise as "per stirpes".
For retirement accounts, the WILL as the secondary benefic is not a good idea i believe because the RMD's could not be taken on an individual to lengthen payout period so as to not incur a big tax liability in the year of the payout
If this account and others like it can flow to the will, this means probate and exact "per stirpes".
Thoughts?

JGoneRiding
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Re: Per Stirpes

Post by JGoneRiding » Thu Feb 01, 2018 8:46 pm

If you name your children and grandchildren all as secondary beneficiaries in the manner you listed you would end up with a unique per capita distribution if one if them pre- deceased you. Not stripes.

Is there a way to designate that if a beneficiary pre deceased you that their shore was suppose to be distributed per your will and NOT to the other beneficiaries or is that not possible either?

CULater
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Re: Per Stirpes

Post by CULater » Thu Feb 01, 2018 9:14 pm

FIREchief wrote:
Fri Jan 19, 2018 8:26 pm
I would never rely on anything VG comes up with wrt beneficiaries. Their archaic beneficiary policies are the primary reason I no longer have any accounts at VG. YMMV.
Agree with this, and have moved a lot of my investments out of Vanguard for the same reason.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

RudyS
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Re: Per Stirpes

Post by RudyS » Thu Feb 01, 2018 9:33 pm

A couple of years ago when I looked into this, Vanguard did not allow secondary beneficiaries on JTWROS accounts. At the time, they told me that too many people got confused by this. Luckily, my account is old enough that we are grandfathered into allowing a secondary beneficiary. It seems that I posted about this a year or so ago.

vest74
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Re: Per Stirpes

Post by vest74 » Thu Feb 01, 2018 11:11 pm

i / we are grandfathered also, and while the method to name 9 beneficiaries on the TOD is weird, it is kinda close to "per stirpes" and people do it. maybe the best we can do without moving to another firm. that 9 bene' method is closer to "per stirpes" than "per capita" so just might do it Same at Ed Jones and Nationwide 457(b) has been done in their places as well( list children and grandchildren all having some %)

smackboy1
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Re: Per Stirpes

Post by smackboy1 » Fri Feb 02, 2018 8:51 am

A beneficiary designation or pay/transfer on death for taxable accounts is an extremely powerful, but very blunt tool. It can override other estate planning and inadvertently create undesired outcomes. It may be appropriate for people where there is no risk of an unintended outcome, for example, no dependents and/or few assets. It's redeeming quality is that it's free and simple to use. If the objective is to avoid probate or preserve privacy or protect wealth for descendants, there are better ways using more flexible and nuanced tools e.g. will, trusts.

Another thing is that "per stirpes" is not universally interpreted to mean the same thing depending what jurisdiction you are in or how exactly the clause is written. There is "strict" a.k.a. "classic" a.k.a. "English" version, which is less common in the US. Then is "modern" a.k.a. "American" version.

Where is makes a difference is if testator has 2 children, and there are 3 grandchildren: 2 by child A and 1 by child B. Testator leaves "to my descendants, per stirpes". If both children die first, then testator dies, how do the assets get split amongst the 3 grandchildren? 25%; 25%; 50% (strict per stirpes). Or 33.33% evenly split between all 3 (modern per stirpes). What if the clause is poorly drafted and reads "to my children, per stirpes"? That could be a problem if child A predeceases and child B survives because it may result in grandchildren by child A's getting nothing. :oops: I suspect that at least one of the reasons some brokerages are reluctant to allow "per stirpes" is that it can cause ambiguity and result in lawsuits.

https://www.dickinsonlaw.com/blogs-arti ... es----what

Also, what happens if after testator's death, one of the grandchildren ends up becoming a spendthrift alcoholic or marries a controlling abusive spouse or gets sued for millions of dollars because they volunteered on a board of a bankrupt hospital? It would probably have been safer to leave them assets in trust with a corporate trustee.

viewtopic.php?f=11&t=239924&newpost=375 ... ead#unread
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.

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