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Vanguard and legal entanglements (Power of attorney, beneficiaries)

Vanguard used to allow one to grant power of attorney (POA) online. This could include instructions directing Vanguard to apply the POA grant to subsequent accounts of the same registration (e.g. new IRAs with the same owner).

However, Vanguard has not been and will not honor those instructions for new accounts. The reason it gave is that Vanguard has since determined that the online form is not legal in Pennsylvania where it operates. So it won't apply the standing instructions to new accounts if the old POA was submitted online.

If you have opened any accounts since granting authority on older ones, you might check to see if this carried over to the new accounts. I discovered the omission when checking the ability of my grantee to access my accounts. Vanguard did not notify me of its change in practices.

Fearing the worst, I also suggest checking on any accounts migrated from Vanguard's mutual fund platform to its brokerage platform. From past experience I know that Vanguard treats these as different accounts and in fact, operated by different companies (Vanguard Group and Vanguard Brokerage Services, I think).

Vanguard requires a paper POA form, including notarization and two witnesses. Just what I'm going to do during a pandemic. Shorter term, limited authority will suffice for any anticipated needs. This can be granted online.

Regarding beneficiaries - the last time I checked, Vanguard did not allow one to designate beneficiaries on a joint account with right of survivorship. This means that in the event of simultaneous death, the account will pass through your will (if any), else by intestate succession.

Comments

  • Hell's bells they wouldn't allow me to name more than one beneficiary on non joint account.
    Derf
  • Thank you, @msf. Not a Vanguard customer, but I know a few folks who have accounts there.
  • edited August 2020
    What happens if you have no poa/beneficiaries and something bad happen to you -Probate processing maybe costly and time consuming.

    I did manage to put wifey name on beneficiary and brother as secondaries, it was easy process two years ago couple of clicks - Not sure about now.

    Thankyou MSF for the reminders, we will process paperworks in schwab and merrilledge also
  • I have no issue with all brokerages I use for primary beneficiaries and secondary beneficiaries. Pretty straight forward with Vanguard. Usually we get reminders to update any changes every year.
  • @johnN & @Sven; Previous attempts to add secondary at VG were feudal . Today went better & I was able to add secondary.
    Thanks to both of you, Derf
  • User interface at Vanguard website is more clunky than Fidelity, for example. For most part they work.
  • "What happens if you have no poa/beneficiaries and something bad happen to you -Probate processing maybe costly and time consuming."

    Probate of an uncontested will is usually easy and doesn't incur large legal fees. While state laws allow executors to collect significant fees, they are not required to take a fee.
    https://www.nolo.com/legal-encyclopedia/how-probate-process-works-information-32438.html
    https://www.nolo.com/legal-encyclopedia/avoid-probate-small-estate-29629.html

    Certainly given the notice requirements for probate, receiving assets through a will (or intestate) takes significantly longer than receiving assets as the beneficiary of a brokerage or bank account. For the most part, that's just added calendar time, not much executor time (as in "time and effort").

    Adding beneficiaries/POD/TOD to accounts is quick, easy, and can save some hassle. Worth doing in many situations. I try to do this where possible. OTOH a will provides virtually unlimited flexibility in where the assets go. IMHO it's not a big deal if you have some assets going through the will if you can't get beneficiaries set up exactly the way you'd like on some accounts. (Not advice; YMMV.)

    WIth respect to Vanguard, there they go again. I was given verbal information - that adding limited authority to one IRA would not "downgrade" existing POA authority on another IRA. The rep I spoke with even checked with someone "in back" to verify this.

    To be safe, I requested confirmation in writing. Vanguard then said no, if you add limited authority to one IRA, that will apply to all your IRAs, and thus downgrade the POA on another IRA to limited authority.

    I believe this latter info, received in writing, is correct. Which raises two questions: what's the point in calling for information, and does anyone there really know what's going on.
  • Vanguard requires a paper POA form, including notarization and two witnesses. Just what I'm going to do during a pandemic. Shorter term, limited authority will suffice for any anticipated needs. This can be granted online.
    Oh yes, Vanguard is very old school on the paper form especially POA. Guess they are strictly following their internal policy on these matters. As I recall awhile back my wife and I were on the phone with the representative to go over the limited trading authority. We then downloaded, signed and sent the form to Vanguard.
  • To be safe, I requested confirmation in writing. Vanguard then said no, if you add limited authority to one IRA, that will apply to all your IRAs, and thus downgrade the POA on another IRA to limited authority.

    I believe this latter info, received in writing, is correct. Which raises two questions: what's the point in calling for information, and does anyone there really know what's going on.
    Reminds me of the hoops I had to go through to find out where the cash in my taxable account was actually located. Was it a money market, or an FDIC account? Most of the people I talked to didn't seem to understand the question.
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