Accounts with more than one owner are considered joint accounts. Two primary types of joint accounts exist:
With rights of survivorship
Tenants in common
Joint WROS accounts
Joint with rights of survivorship (WROS) accounts give each owner an equal ownership interest. 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. Joint WROS accounts may also include a transfer on death (TOD) designation. The TOD feature applies only if all account owners die. If that happens, the assets pass to the account beneficiaries.
Joint TIC accounts Joint accounts may also be set up as tenants in common (TIC) accounts. With TIC accounts, each owner has a specific ownership percentage. If one owner dies, that owner’s percentage 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 is handled in probate court. Jim keeps his 40% and moves it to an individual account in his name.
Joint accounts in general Regardless of the type of joint account, WROS and TIC accounts function the same while all 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 permission from the other owners. However, all account owners’ names must appear on any issued check, regardless of who requested the check.
Sidenote
Tenants by entirety & community property accounts You may see a test question referring to tenants by entirety (TBE) and/or community property (CP) accounts. These are similar to joint WROS accounts, but only married couples may open them. In contrast, two or more adults of any relationship can open a WROS account. TBE and CP accounts are generally used for jointly held property (e.g., real estate) between married couples. There are many legal and tax-related implications for community property accounts, but you likely won’t be tested on those topics. Also, roughly half of U.S. states recognize these accounts, so you may live in a state where they don’t exist.
Key points
Joint WROS accounts
Provide equal ownership to all parties
Surviving owner(s) inherit the account
Avoids probate
Joint TIC accounts
Provide specific ownership allotments
Deceased owner portions go to the estate
Subject to probate
Joint accounts
Any joint owner can:
Trade
Receive mail
Manage the account
All joint owner names must be on checks
Accounts with more than one owner are considered joint accounts. Two primary types of joint accounts exist:.