Individual Account

An individual account is an account that is owned by one person. That person makes the determination as to what securities are purchased and sold. In addition, that person receives all of the distributions from the account.

Joint Account

A joint account is an account that is owned by two or more adults. Each party to the account may enter orders and request distributions. The registered representative does not need to confirm instructions with both parties. Joint accounts require the owners to sign a joint account agreement prior to the opening of the account. All parties must endorse all securities and all parties must be alive. Checks drawn from the account must be made out in the names of all of the parties.

Joint Tenants With Rights of Survivorship (JTWROS)

In a joint account with rights of survivorship, all the assets are transferred into the name of the surviving party in the event of one tenant’s death. The surviving party becomes the sole owner of all of the assets in the account. Both parties on the account have an equal and undivided interest in the assets in the account.

Joint Tenants in Common (JTIC)

In a joint account that is established as tenants in common, if one party dies all the assets of the tenant who has died become the property of the decedent’s estate. They do not become the property of the surviving tenant. An account registered as joint tenants in common allows the assets in the account to be divided unequally. One party on the account could own 60% of the account’s assets.

Note: Any securities registered in the names of two or more parties must be signed by all parties and all parties must be alive to be considered good delivery.

Transfer on Death (TOD)

An account that has been registered as a transfer on death account allows the account owner to stipulate to whom the account is to go to in the event of their death. The party who will become the owner of the account in the event of the account holder’s death is known as the beneficiary. The beneficiary may only enter orders for the account if they have power of attorney for the account. Unlike an account that is registered as JTWROS, the assets in the account will not be at risk should the beneficiary be the subject of a lawsuit, such as in a divorce proceeding.

Death of a Customer

If an agent is notified of the death of a customer the agent must immediately cancel all open orders and mark the account deceased. The representative must await instructions from the executor or administrator of the estate. In order to sell or transfer the assets, the agent must receive:

  • Letters testamentary
  • Inheritance tax waivers
  • Certified copy of the death certificate

The death of a customer with a discretionary account automatically terminates the discretionary authority.

Partnership Accounts

When a professional organization, such as a law partnership, opens an account, the registered representative must obtain a copy of the partnership agreement. The partnership agreement will state who may enter orders for the account of the partnership. If the partnership wishes to purchase securities on margin, it must not be prohibited by the partnership agreement.

Corporate Accounts

Corporations, like individuals, will purchase and sell securities. In order to open a corporate account, the registered representative must obtain a corporate resolution that states which individuals have the power to enter orders for the corporation. If a corporation wants to purchase securities on margin, then the registered representative must obtain a corporate charter and the by-laws that state that the corporation may purchase securities on margin. Finally, a certificate of incumbency must be obtained for the officers who are authorized to transact business for the corporation, within 60 days of the account opening.

Securities Training Materials

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