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Question

Difficulty: EasyCustomer Account Types and Ownership Structures

Match each customer account ownership structure or authorization type with its defining legal or operational characteristic.

  • Transfer on Death (TOD) AccountPasses individual account assets directly to named beneficiaries upon death, bypassing probate while maintaining owner control during life.
  • Discretionary Account with Limited Power of Attorney (LPOA)Grants an authorized third party trading discretion over order entry without granting the privilege to withdraw funds or securities.
  • Irrevocable Trust AccountTransfers assets into a separate legal vehicle managed by a trustee for beneficiaries, which cannot be modified or canceled by the grantor once created.
  • Partnership AccountRequires legal documentation specifying which designated individuals hold authority to execute investment transactions on behalf of the entity.

Answer

Transfer on Death (TOD) Account matches with direct beneficiary asset transfer bypassing probate; Discretionary Account with Limited Power of Attorney matches with trading authority without withdrawal rights; Irrevocable Trust Account matches with an unalterable separate legal structure under trustee authority; Partnership Account matches with requiring documentation specifying authorized partners.
Each account ownership structure matches its exact legal feature: Transfer on Death (TOD) bypasses probate for individual account owners; Limited Power of Attorney permits trading discretionary authority while prohibiting cash or security withdrawals; Irrevocable Trusts permanently transfer asset control to a trustee and cannot be modified; and Partnership accounts require documentation specifying which partners have trading authority.

Step-by-Step Solution

1
Identify individual account beneficiary features.
Pair Transfer on Death (TOD) Account with non-probate direct beneficiary transfer.
TOD designations allow account holders to pass assets directly to beneficiaries without estate probate.
2
Distinguish between limited and full power of attorney trading rights.
Pair Limited Power of Attorney (LPOA) with order placement authorization excluding capital withdrawals.
LPOA permits trading activity only; disbursement authority requires Full Power of Attorney.
3
Evaluate trust structures based on alterability and asset separation.
Pair Irrevocable Trust Account with unchangeable trustee-managed asset structures.
Irrevocable trust terms cannot be altered or dissolved by the grantor after being established.
4
Identify business entity documentation requirements for trade execution.
Pair Partnership Account with agreement documentation establishing partner trading authority.
Broker-dealers require an executed partnership agreement identifying partners authorized to bind the partnership.

Key Concept

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