An investor opens a joint brokerage account with their sibling, specifying that ownership is divided unequally (60% and 40%) and that each owner's share must pass to their respective estate upon death. Additionally, the owners grant their trusted third-party financial adviser permission to place trades in the account, but explicitly withhold authority for the adviser to withdraw funds or transfer assets. Based on FINRA regulations governing customer account ownership and trading authorizations, which of the following statements are correct?
- The account must be established as Tenants in Common (TIC) to support unequal ownership shares and direct a deceased owner's interest to their estate.Answer
- The financial adviser must execute a Limited Power of Attorney (LPOA) to obtain order entry privileges without cash disbursement authority.Answer
- CUpon the death of either owner, the deceased owner's account interest automatically transfers to the surviving sibling, avoiding probate.
- DA Full Power of Attorney (FPOA) is mandatory whenever a third-party adviser is authorized to place securities trades in a joint account.
Answer
The correct statements are that the account must be structured as Tenants in Common (TIC) to support unequal ownership proportions passing to an estate, and that the adviser requires a Limited Power of Attorney (LPOA) for trading-only authority.
Tenants in Common (TIC) accounts accommodate unequal ownership interests and mandate that a deceased owner's share passes to their estate. A Limited Power of Attorney (LPOA) grants third-party trading privileges while explicitly prohibiting asset withdrawals.
Step-by-Step Solution
Key Concept
Distinction between Tenants in Common (TIC) vs. Joint Tenants with Rights of Survivorship (JTWROS), and Limited vs. Full Power of Attorney trading authorizations.