Accounts with more than one owner are considered joint accounts. Two primary types of joint accounts exist:
Joint with rights of survivorship (WROS) accounts give each owner equal ownership. If one owner dies, the surviving owner(s) automatically become the owner(s) of the entire account. For example, assume John and Stacey own a joint WROS account. If John dies, Stacey becomes the sole owner of the account. As long as at least one owner is still living, joint WROS accounts avoid probate.
A joint WROS account may also include a transfer on death (TOD) designation. The TOD only applies if all account owners die. If that happens, the assets pass to the account beneficiaries.
Joint accounts may also be set up as tenants in common (TIC) accounts. This type of joint account assigns specific ownership percentages to each owner. If one owner dies, that owner’s share becomes part of their estate and is handled in probate court.
For example, assume Jim owns 40% of a TIC account and Jada owns 60%. If Jada dies, her 60% becomes property of her estate and goes through probate. Jim keeps his 40% and would move it to an individual account in his name.
While all owners are alive, WROS and TIC accounts generally function the same way. Even if there are 15 joint owners listed, any one owner can submit trading instructions, receive all the mail, manage the account, and request withdrawals without permission from the other owners. However, any check issued from the account must include the names of all account owners, no matter who requested the check.
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