A joint account is a brokerage or bank account owned by two or more individuals. There are several forms of joint ownership, each with different legal implications.
Types of joint accounts:
Joint Tenants with Rights of Survivorship (JTWROS): - Each owner has an equal, undivided interest. - On death of one owner, that owner's interest passes automatically to the surviving owner(s) — bypasses probate. - Cannot pass JTWROS interest through a will. - Most common form for married couples.
Tenants in Common (TIC): - Each owner has a specified fractional interest (not necessarily equal — e.g., 60%/40%). - On death, the deceased's share passes through their estate/will — does NOT automatically go to surviving owner. - Useful for business partners or unmarried individuals who want to control who inherits their share.
Tenants by the Entirety (TE): - Only available to married couples in states that recognize it. - Neither spouse can sell or encumber the property without the other's consent. - Automatic survivorship like JTWROS. - Protected from creditors of only one spouse (in many states).
Community Property: - Used in community property states (CA, TX, AZ, etc.). - Assets acquired during marriage are owned 50/50 regardless of whose name is on the account.
Account instructions: For joint accounts, broker-dealers typically accept instructions from any one of the joint owners.
> Exam tip: JTWROS = survivorship (bypasses probate). TIC = no survivorship (goes through estate). This distinction is heavily tested on the Series 7, Series 65, and CFP® exams.