Author Topic: I know what I want...does it exist?  (Read 4501 times)

rockstache

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I know what I want...does it exist?
« on: February 14, 2017, 06:46:53 AM »
Hi all,

I am looking for an account with very specific parameters, but I am not sure it exists. I've searched a lot, but can't seem to find it. What I want is:

-a taxable investment account in my name
-at an institution that allows me to open more than 1 account (in my name) and designate a separate beneficiary for each one
-with a low/no minimum ($500 or less)
-with no required monthly deposit

What I am looking to do is invest for nieces and nephews, about $100 per year. I do NOT want a 529, custodial account, or other kid-related thing. I want them to get this when I die, and not when they turn 18 etc. I also do not want it to be a retirement account.

Vanguard does not allow separate beneficiaries on different accounts and also they have higher minimums than I want, so that isn't really an option.

Is this a possibility? Have you heard of anything like it? I won't be trading, I will just put the amount in the (hopefully low fee index fund stock) accounts and then never touch it.

extremedefense

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Re: I know what I want...does it exist?
« Reply #1 on: February 14, 2017, 07:10:54 AM »
Yes it does.

You're looking for a "transfer-on-death (TOD) form." It's available in every state except Texas, Louisiana, and Puerto Rico.

https://www.nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter3-2.html

You would use this on a CMA account that is not a custodial account or retirement account.

Look into Merrill Edge, because if you have combined banking / investment accounts of $25,000, you get 30 free stock / ETF trades per month.

rockstache

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Re: I know what I want...does it exist?
« Reply #2 on: February 14, 2017, 07:25:32 AM »
Hi extremedefense,

I know a little bit about the TOD/POD form, and I get that I can use that on any account I open.

I am really more interested in which account to open. There is no way that these accounts are going to get to $25k anytime soon. Does Merrill Edge let me open multiple brokerage accounts in my own name?

Freedomin5

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Re: I know what I want...does it exist?
« Reply #3 on: February 14, 2017, 07:37:59 AM »
In Canada, i just buy mutual funds/seg funds through an insurance company. They all allow me to designate beneficiaries, and they seem to meet all your other requirements. Also, I open one account with multiple beneficiaries. You can set the percentage of the proceeds that go to each beneficiary.

Not sure if it works the same way in the US.

extremedefense

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Re: I know what I want...does it exist?
« Reply #4 on: February 14, 2017, 07:39:50 AM »
I am really more interested in which account to open. There is no way that these accounts are going to get to $25k anytime soon. Does Merrill Edge let me open multiple brokerage accounts in my own name?

I would open multiple CMA accounts (online, self directed).

This has more info https://www.merrilledge.com/pricing

As a full fledged investment account, you can do $0 load-waived mutual funds, and once your combined balances are >$25,000 you can start using the $0 stock / ETF trades.

From personal experience, I opened a self directed CMA in 2013, and put $25 in it (I think that was the minimum at the time), but now it looks like the minimum investment is $0? Anyways, I had the account for 4 years, no annual fee, just my $25 sitting in it, not doing anything.

Give it a shot, I'm in Texas and can't add the TOD form on my account(s), but you should have no problem opening multiple CMA's and having a different TOD for each account (to different nieces and nephews). Most importantly, the $0 minimum and no annual fee should make it a no brainer, but you should double check the fine print when you open them!

Good luck!

yachi

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Re: I know what I want...does it exist?
« Reply #5 on: February 14, 2017, 08:27:23 AM »
I think you should reconsider 529 plans.  If you leave it in your name with your niece/nephew as a beneficiary, you keep it.  It's only if you open it in their name (custodial 529) that control is transferred to them when they turn 18.

Here:
http://money.usnews.com/money/personal-finance/mutual-funds/articles/2014/11/24/8-common-misconceptions-about-529-plans

rockstache

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Re: I know what I want...does it exist?
« Reply #6 on: February 14, 2017, 09:06:06 AM »
I think you should reconsider 529 plans.  If you leave it in your name with your niece/nephew as a beneficiary, you keep it.  It's only if you open it in their name (custodial 529) that control is transferred to them when they turn 18.

Here:
http://money.usnews.com/money/personal-finance/mutual-funds/articles/2014/11/24/8-common-misconceptions-about-529-plans

 I don't want it to be for education, and I want the option to keep it should they decide to do drugs or something. It is for them to have when I die, which I hope is >18 years away. I'm not terribly impressed with 529 plans at all.

ETA: I should say I'm not impressed with the limitations of 529 plans. Why do you like them so much, or what makes you think that this would be a good option for what I am trying to do?

To clarify, their parents are saving for college. I'm not trying to do that here. If i'm missing a loophole, please let me know.
« Last Edit: February 14, 2017, 09:11:19 AM by rockstache »

extremedefense

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Re: I know what I want...does it exist?
« Reply #7 on: February 14, 2017, 09:19:28 AM »
Rockstache is right, why limit the funds usage to only college, he just wants an investment account that will go to someone else when he dies, but they can't utilize it while he is still alive?

yachi

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Re: I know what I want...does it exist?
« Reply #8 on: February 14, 2017, 11:20:24 AM »
I think you should reconsider 529 plans.  If you leave it in your name with your niece/nephew as a beneficiary, you keep it.  It's only if you open it in their name (custodial 529) that control is transferred to them when they turn 18.

Here:
http://money.usnews.com/money/personal-finance/mutual-funds/articles/2014/11/24/8-common-misconceptions-about-529-plans

 I don't want it to be for education, and I want the option to keep it should they decide to do drugs or something. It is for them to have when I die, which I hope is >18 years away. I'm not terribly impressed with 529 plans at all.

ETA: I should say I'm not impressed with the limitations of 529 plans. Why do you like them so much, or what makes you think that this would be a good option for what I am trying to do?

To clarify, their parents are saving for college. I'm not trying to do that here. If i'm missing a loophole, please let me know.

In my state contributions to 529 plans are tax deductible, so you're getting something for you contribution.  I see now that's not the case everywhere.  It it's used for education, they get it tax free, if not, they pay a 10% penalty.  I don't see the education benefit part as a great loss of flexibility, and I was surprised you wrote them off from the start, that's all.

AMandM

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Re: I know what I want...does it exist?
« Reply #9 on: February 14, 2017, 11:47:05 AM »
Maybe I'm missing something, but why not just open one account and leave it in your will to be divided among your nieces and nephews?

Brilliantine

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Re: I know what I want...does it exist?
« Reply #10 on: February 14, 2017, 11:55:16 AM »
Maybe I'm missing something, but why not just open one account and leave it in your will to be divided among your nieces and nephews?
+1

NoStacheOhio

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Re: I know what I want...does it exist?
« Reply #11 on: February 14, 2017, 12:00:11 PM »
I think Fidelity lets you do this, and they have no-transaction fee index funds (ITOT and FSTVX)

ShoulderThingThatGoesUp

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Re: I know what I want...does it exist?
« Reply #12 on: February 14, 2017, 12:08:34 PM »
Schwab will also let you do this. They have no-commission ETFs that are competitive with Vanguard's.

rockstache

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Re: I know what I want...does it exist?
« Reply #13 on: February 14, 2017, 12:18:35 PM »
Maybe I'm missing something, but why not just open one account and leave it in your will to be divided among your nieces and nephews?
+1

It won't be even/equal (savings accounts are started already based on when they were born - some are not yet born), so I just want to do the POD, and let the entire account transfer to them with no confusion about who gets what.

rockstache

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Re: I know what I want...does it exist?
« Reply #14 on: February 14, 2017, 12:22:31 PM »
Thanks for the responses everyone. I will look into all the suggestions.

529s are deductible in my area too. Some of them will likely go to school and others will likely not (different parents with different priorities and ways of raising them - of which I have no/limited control & influence). I don't think it would be fair for me to set something up for only the education bound ones to utilize.


RyanAtTanagra

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Re: I know what I want...does it exist?
« Reply #15 on: February 14, 2017, 02:55:49 PM »
I believe etrade would let you do this as well.  I have a taxable investment account with them.  No minimums, just the minimum on whatever fund you're buying.  No regular deposits needed.  No fees, I'm pretty sure (I have enough with them between different accounts that I don't pay fees for things that would otherwise have them).  Check they have the funds you want though.  They have thousands, but there are some Vanguard ones they lack, last I checked anyway.

Counting_Down

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Re: I know what I want...does it exist?
« Reply #16 on: February 14, 2017, 03:34:48 PM »
FWIW, I opened a regular taxable account for my nephew when he was born.  Chose that over the other options for similar reasons as you.  Account was opened originally with Betterment- they allow multiple accounts under the same name, but am transferring to Vanguard due to displeasure with Betterment.  Called Vanguard, explained the situation, asked if they'd open a regular taxable account separate from my preexisting one with them - they did.  Uses my same log-in but has a totally different account number and can be transferred to my nephew at the time of my choosing.  Understand you've negated Vanguard as an option, but I suspect others may be flexible if you speak with someone.

AMandM

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Re: I know what I want...does it exist?
« Reply #17 on: February 14, 2017, 05:06:38 PM »
Maybe I'm missing something, but why not just open one account and leave it in your will to be divided among your nieces and nephews?
+1

It won't be even/equal (savings accounts are started already based on when they were born - some are not yet born), so I just want to do the POD, and let the entire account transfer to them with no confusion about who gets what.

Oh, I see.  Just curious, are you planning to contribute to each account for a fixed length of time or  to keep contributing indefinitely and thereby leave more money to the older?

rockstache

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Re: I know what I want...does it exist?
« Reply #18 on: February 14, 2017, 06:42:21 PM »
Probably just contribute until they each turn 18.

Reynolds531

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Re: I know what I want...does it exist?
« Reply #19 on: February 14, 2017, 06:51:19 PM »
Nothing useful to add, but can I be adopted as your nephew?

SwordGuy

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Re: I know what I want...does it exist?
« Reply #20 on: February 14, 2017, 06:58:44 PM »
I believe you can have one account set up with multiple beneficiaries, each with a different percent.

If you set it up with beneficiaries listed I believe no will is necessary. 

Of course, double check with your account provider and jurisdiction...

rockstache

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Re: I know what I want...does it exist?
« Reply #21 on: February 14, 2017, 07:02:34 PM »
Nothing useful to add, but can I be adopted as your nephew?

Haha! I am taking applications but there is a pretty stringent vetting process.