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Guide to beneficiaries

Nonretirement accounts

Most nonretirement accounts don't have named beneficiaries, and may not need them depending on the estate-planning choices you've already made. Each option has advantages and disadvantages. This is why it's important for you to consult with an estate-planning attorney to determine what's best for you.

Your options Some advantages Some disadvantages
Your will
  • Flexible. Identify the parties entitled to your assets.
  • Detailed. Stipulate how and when the assets are distributed.
  • Tax-efficient. Allow for best way to divide your assets after you die.
  • Assets risk. Your assets may be subject to creditors.
  • Probate. Your assets will have to go through probate.
A trust
  • Customizable. Specify who gets your assets and how they are distributed.
  • Probate. This is avoided.
  • Expensive. You traditionally pay more to prepare than a will-based estate plan.
The Vanguard Transfer on Death Plan
  • Simple. Name individuals, trusts, or organizations/charities as your beneficiaries.
  • Probate. This is avoided.
  • Assets risk. Your assets may be subject to creditors.
  • Limited. Does not allow for more complex estate-planning techniques.
  • Dominant. Can override an established will, trust or other estate plans you've made.

The questions below may help you determine if you want to add beneficiaries to your nonretirement Vanguard accounts using the Transfer on Death (TOD) Plan.

Is the Vanguard TOD Plan right for my accounts?

  • The Vanguard Transfer on Death Plan lets you name individuals, trusts, or organizations/charities as beneficiaries only on your individually owned nonretirement Vanguard accounts. (Jointly owned accounts already have the remaining owner as the beneficiary if one owner dies.)
  • TOD isn't a substitute for a comprehensive estate plan and works best only when your instructions are simple and direct.
  • This plan may not be right for you if you own community property assets.
  • If you want to impose restrictions on how your beneficiaries will receive and use your assets or want to take advantage of more sophisticated estate-planning techniques, you may need a more flexible solution. See the next question below.

I feel like the Plan is not right for me; what are my other options?

  • Start with legal advice. We strongly encourage you to consult with your legal advisor. You may be a do-it-yourselfer when it comes to other aspects of your financial life, but estate-planning is one area where it's smart to get professional help.
  • Among other things, the process can entail preparing a will, creating trusts, naming beneficiaries for insurance policies and retirement accounts, and selecting guardians for minor children. In addition, some families need to plan to minimize estate taxes.

The Plan seems right for me; what's next?

  • Start with legal advice. We strongly encourage you to consult with your legal advisor before you enroll.
  • You will get a confirmation statement listing the beneficiaries you've chosen.
  • Review the Plan. Once you and your legal advisor decide this option is right for you, you can add your beneficiaries online or complete the TOD Plan Form.
  • If you've determined that the TOD Plan is right for your Vanguard nonretirement account, the table below shows whom you can name as beneficiaries under the plan.
Types of nonretirement beneficiaries
Individuals
  • Name one or more individuals.
  • Allocate assets as you wish.
Trust
  • The trust must already exist or be created under the terms of your will or estate-planning documents.
  • No documentation is needed to name the trust as the beneficiary, but is required for payout.
  • Name one or more charities or organizations.
  • Consult with an estate-planning attorney.
Charities and organizations
  • Name one or more charities or organizations.
  • Consult with an estate-planning attorney.

I've set up my beneficiaries; what else do I need to do?

  • Any time you experience a life event—a marriage, birth, divorce, or death in the family—you should consider how the change in circumstance affects your beneficiaries.
  • Every year near your birthday, we'll send you a Beneficiary Verification Confirmation. This is a good reminder to review your estate plan. If you have recently set up a will or trust, you may need to revisit your TOD Plan with your financial and/or legal advisor.
  • If you realize you want to remove your beneficiaries because the TOD Plan conflicts with other estate plans you've made, you can remove them online or with the TOD Plan kit.
  • Keep a copy of your verification statements with your other estate documents. After your death, your beneficiaries will need to contact Vanguard to have assets transferred.

 

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