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Question

Difficulty: HardCustomer Account Types and Ownership Structures

Match each customer account type or authorization structure on the left with its defining legal, tax, or operational rule on the right.

  • Tenants in Common (TIC)Deceased owner's fractional interest passes to their estate rather than surviving account holders.
  • Transfer on Death (TOD) Individual AccountAllows account assets to transfer directly to named beneficiaries upon death without probate, while retaining full owner control during lifetime.
  • UTMA Custodial AccountIrrevocable gift registered under one minor's Social Security Number with all assets becoming the minor's property.
  • Limited Power of Attorney (LPOA)Allows a third party to enter trade orders for the account, but explicitly prohibits withdrawing funds or securities.

Answer

Tenants in Common (TIC) matches with estate transfer of fractional interest; Transfer on Death (TOD) Individual Account matches with direct beneficiary transfer bypassing probate; UTMA Custodial Account matches with irrevocable gift under a minor's SSN; Limited Power of Attorney (LPOA) matches with third-party trading authority without withdrawal privileges.
Each account ownership structure and authorization arrangement is accurately paired with its governing FINRA/SEC regulatory rule and legal outcome.

Step-by-Step Solution

1
Analyze joint account survivorship rules for Tenants in Common (TIC).
TIC accounts do not carry survivorship rights; deceased owner's fractional share moves to their estate.
TIC accounts permit custom ownership percentages and pass assets according to the deceased's will or estate plan rather than to co-owners.
2
Evaluate individual account beneficiary designations (TOD).
TOD avoids probate by transferring securities to named beneficiaries at death without giving them lifetime access.
TOD changes post-death disposition of individual accounts while preserving sole account owner control while living.
3
Determine custodial account tax and legal ownership rules under UTMA.
UTMA accounts belong to one minor under their SSN, and contributions are irrevocable gifts.
FINRA rules require custodial accounts to have one custodian and one minor beneficiary, with gifts irrevocably vested in the minor.
4
Distinguish Limited Power of Attorney from Full Power of Attorney permissions.
Limited POA permits trade execution only, prohibiting asset withdrawals.
A Limited POA restricted trading authority prevents unauthorized third-party disbursements.

Key Concept

Customer Account Types and Ownership Structures
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Customer Account Types and Ownership Structures