Accounts with more than one owner are considered joint accounts. Two primary types of joint accounts exist:
Joint with rights of survivorship (WROS) accounts provide equal ownership rights to all owners. If one of the owners passes away, the remaining owners fully own the account. For example, assume John and Stacey own a joint WROS account together. If John passes away, Stacey now owns the entire account. As long as there’s a surviving owner, joint WROS accounts avoid probate.
Joint WROS accounts may also contain a transfer on death (TOD) designation, which only applies if all account owners pass away. If that were to occur, the assets would become the property of the account beneficiaries.
Joint accounts may also be set up as tenants in common (TIC) accounts. This joint account type provides specific ownership allotments to their owners. If one of the owners passes away, their allocation goes to their estate and is handled in probate court. For example, assume Jim owns 40% of a TIC account, and Jada owns 60%. If Jada were to pass away, her 60% would become the property of her estate and be handled in probate court. Jim would keep his 40% and move it to an individual account in his name.
Regardless of the type of joint account, both WROS and TIC accounts work the same when all account owners are alive. 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 the permission of the other owners. However, all account owners’ names must appear on any issued check, regardless of who requested the check.
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