Author Topic: Opening Joint Account (Joint Tenants vs Community Property) with Vanguard  (Read 69 times)

j9a8m7i6e

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I'm trying to open a brokerage account on Vanguard's website. I'm recently married and I believe I want to open a joint account (feel free to try to explain to me why this might not be a good idea... I've read some scenarios where it might be better to open individual and then designate a beneficiary). When I get to the online page to open a joint account, it gives me me 4 different options:

1. Joint tenants with right of survivorship
2. Tenants in common
3. Community Property
4. Community property with right of survivorship


Now I live in California - a Community property state. I've read various things that have lead me to believe that opening a community property with right of survivorship is best, because when one of us dies, the survivor will get a 100% step up. Here is what I thought was a good example:

https://bottomlineinc.com/money/banking/the-pros-and-cons-of-joint-accounts


However, we might not always live in a community property state, and really I'm confused because I thought that we are already in a community property state - wouldn't a joint account automatically become a community property account?? I'm confused why Vanguard is making me choose when I thought it was something automatic. SO then if and when we move out of California (very good chance we will not live here forever), is it going to be a pain to convert our account to a regular joint account?

I've called Vanguard and they told me to talk to my tax professional... which I do not have at the moment. I'm hoping to get some cheaper advice....

oh and as a bonus question - if we want to eventually transfer our joint account to an individual account (if we find out there are better benefits to that...) - is that going to be a huge pain with tax implications?


I just want a full picture before I open an account that I cannot change later ! Thanks.