Monday, May 6, 2019

Moving/ Converting From a Single to Joint Account in Interactive Broker

A while ago, I thought of how to manage my estate should any untoward happen to me. The key is how to allow access/ transfer the interactive broker portfolio to my spouse in a most fuss free manner and to avoid estate tax.

I went to shiny things thread and the other interactive broker thread on hwz to ask around (Credits to BBCWatcher) and what i learnt are:

a) To avoid estate tax legally, keep your total U.S estate taxable assets - which includes any assets individually or jointly - across all accounts (worldwide) at or under USD$60,000. 

- IWDA is not part of the taxable assets as it is Irish-domiciled
- I understand US Treasuries are not counted as taxable assets
- Monies in Interactive brokers are considered as taxable assets
- US Stock in any broker are considered. Do take into account those under your Standard Chartered or other brokers as they will sum up together
- If it is a joint account, it will count towards you and your wife. Eg. Person A pass away, it will count fully towards his taxable asset even though it is a joint account between Person A and B. If Person B later pass away, these monies will count towards her taxable assets too.

b) Alternatively, buy insurance to offset the tax

Nonetheless, there are benefits to a joint account which is ease of access. I figure that as long as I keep within the taxable limits (which is easy for me), i can reap the benefits of a joint account - Tenants with Rights of Survivorship

The definitions of the different types of Joint acc under IB (with the key benefit highlighted in yellow) are:


Joint Account

An Interactive Brokers account owned by two individuals. A Joint Account can be associated with one of three customer types:
  • Joint Tenants with Rights of Survivorship - A form of ownership in which two or more parties have equal interests in the account and in which title to the entire account goes to the survivor(s) upon the death of one of the account holders. This process avoids court probate of the property, but may have some tax consequences which should be reviewed with a tax advisor prior to opening the account.
  • Community Property - Community Property is property received by a husband and wife during the marriage, except inheritances and specific gifts to one of the spouses. This form of ownership is recognized only in certain states which have community property laws and each spouse has an undivided one-half interest in the account. The states with community property laws at this time are: Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico and Wisconsin. Upon the death of one spouse, the community property in the account generally passes to the other spouse with certain exceptions, including Texas, Nevada and New Mexico.
  • Tenants in Common - A form of ownership by two or more persons in which each person has an undivided interest in the account even though the percentage of interests may not be equal. Unlike joint tenants, there is no right of survivorship if one of the account holders ides. Upon the death of one tenant in common, a probate proceeding (court-supervised administration of the estate of the deceased) must be held to transfer the ownership interest in the account. This type of joint account requires that you enter ownership percentages in the account application.

I figured that this can resolve the issue of transfer in the event of demise. 

I set out to get this done and the instructions are at this page.

I must say the process is not complicated but very long as it took a while for IB to get back on the required documents and that some of the terms/requirements may diff and we need to find the appropriate documents that are relevant to their context. 

In gist, the steps are:
a) Create a new joint account with you and your spouse name from your account setting
b) Send in a request from your individual account to ask for transfer of everything to the joint account
c) Submit whatever is required (This took the longest due to replies to and fro through the request ticket)
d) (Optional) Backup/ download all statements from the individual account
e) Wait for everything to be effected
f) (Optional) Ask for IB to close the individual account. 

a) Create a new joint account with you and your spouse name from your account setting

This is a fuss free process just like how you set up your own account, except that you login and create from your account setting. 

These are the steps. The parts to note are some of the headings refer to (primary holder) while some are (secondary holder). Pls fill in correctly. Other than that, should be quite self-explanatory.

Will create additional posts on the steps b - f


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  2. How like to ask if changing from single to joint account will change anything in terms of the fee and commission structure