Treasury Direct Joint Account?

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nesdog
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Treasury Direct Joint Account?

Post by nesdog » Mon Aug 20, 2018 9:26 pm

There are some old threads on this but I couldn't find more current information.

We want to purchase some t-bills, funding this from our joint savings account. I don't see any way to open a TD account with joint/co ownership. Is there some way to do this? We don't have a trust at this point.

Thanks...

123
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Re: Treasury Direct Joint Account?

Post by 123 » Mon Aug 20, 2018 10:38 pm

From browsing the Treasury Direct website there's no readily obvious way to open a joint account apparent to me. In the olden days when Treasury Direct was all paper-based with mailed forms joint accounts were readily available. Guess they took a big step backward in that regard.

You may want to use/open a brokerage account. You can buy treasury securities in most brokerage accounts. Fidelity and Schwab (there are likely others as well) let you buy treasury securities(at auction) without fees or commissions. From my experience Fidelity is somewhat better than Schwab in this regard because Fidelity lets you buy treasury securiites with an option for ongoing automatic rollovers (which you can cancel). A brokerage account can make it easier to sell a treasury security early if you don't want to hold it to maturity.
The closest helping hand is at the end of your own arm.

chemocean
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Re: Treasury Direct Joint Account?

Post by chemocean » Tue Aug 21, 2018 7:51 pm

I have limited knowledge about TD accounts themselves, but I have significant experience helping my father' to title his bonds in his account. You can have only ONE of the following on any Treasury bond: a) a co-owner or b) a beneficiary (not both). So, my assumption is that the TD accounts are for individuals, but once you buy the bonds you can title the investments (bonds) with a co-owner or a beneficiary.
Once the owner dies, I think it is easier for the co-owner to access the account than a beneficiary. The Co-owner fills out form 5512 to redeem the bonds (with the accrued taxable interest if I-Bonds) or form 5511 to transfer the bonds in the co-owners TD account. Both require medallion signature guarantees. Once the bonds have been transferred to the co-owner's TD account with the co-owner now being sole owner, he/she can assign another co-owner or beneficiary.
For beneficiaries, the process is a bit more complicated. Beneficiaries do not have access to the account, only the executor does. The executor submits the certificate of death and other documents (Affidavit of Executor) to obtain the information on the value and name of each beneficiary on each I-Bond. The Executor then sends that information to all beneficiaries. Each beneficiary then takes the form 5511 or 5512 and the printed information to the bank to get the medallion signature guarantee. This process is required because the bank won't issue a medallion signature guarantee without have a printed copy of the the value of the bond and the name of beneficiary for each beneficiary that they are guaranteeing the signature. Some time after the form is submitted, the beneficiary will receive a check or the bond with same maturity and accrued interest will appear in the beneficiaries TD account (possibly in a special status). Again, at that point the beneficiary can assign either a new co-owner or a new beneficiary.
This not much different than Vanguard. Vanguard does not allow beneficiaries to be assigned to joint accounts. (only one co-owner)

chemocean
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Re: Treasury Direct Joint Account?

Post by chemocean » Tue Aug 21, 2018 7:54 pm

If you are buying more than one bond, hedge your bets and each open TD accounts. Each partner then purchases the bonds and names the other as co-owner.

nesdog
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Re: Treasury Direct Joint Account?

Post by nesdog » Tue Aug 21, 2018 9:35 pm

Glad to hear that it's possible to add a co-owner. Appreciate that detailed information you passed along as well!

Our current plans are to open a series of 6 month t-bills, so in any event, none of the funds will be tied up long term. All will go back to our joint bank accounts.

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FIREchief
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Re: Treasury Direct Joint Account?

Post by FIREchief » Tue Aug 21, 2018 10:21 pm

I think you should follow the advice to just open a joint brokerage account at Fidelity and buy and hold the treasuries there. Unless you want/need to buy them in less than $1000 increments, I know of no advantage to using Treasury Direct.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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HueyLD
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Re: Treasury Direct Joint Account?

Post by HueyLD » Wed Aug 22, 2018 6:57 am

nesdog wrote:
Tue Aug 21, 2018 9:35 pm
Glad to hear that it's possible to add a co-owner. Appreciate that detailed information you passed along as well!

Our current plans are to open a series of 6 month t-bills, so in any event, none of the funds will be tied up long term. All will go back to our joint bank accounts.
The TD does not have a joint account ownership structure.

Per https://www.treasurydirect.gov/indiv/he ... lp/faq.htm

"Sole Owner: Only one individual is named as owner.

Primary Owner (with Secondary Owner): Two individuals' names are recorded for the security in TreasuryDirect, separated by the word "WITH." For example, "John Smith SSN 123-45-6789 WITH Mary Smith SSN 987-65-4321." The primary owner is named first and has the right to transact the security. Upon the death of either the primary or secondary owner, the survivor will be considered the sole owner of the security.

Beneficiary: Only the owner has transactional rights during his or her lifetime. The beneficiary automatically becomes the sole owner of the security when the original owner dies."

In other words, a secondary owner does not have the same right as a co-owner. Rather, the secondary owner is more like a beneficiary. However, the primary owner can grant transactional rights to the secondary owner after the account is open.

Note that you cannot sell within TD before maturity. So, keep that in mind.

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