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Question

Difficulty: MediumCustomer Account Types and Ownership Structures

A married couple opens a joint brokerage account designated as Joint Tenants with Rights of Survivorship (JTWROS). If one spouse unexpectedly passes away, what happens to the ownership of the securities held in the account?

  1. A
    The deceased spouse's share of the account assets passes to their estate and must go through probate.
  2. The entire account balance automatically passes to the surviving spouse without undergoing probate.Answer
  3. C
    The account is immediately frozen by the broker-dealer until a court appoints an executor for the decedent's estate.
  4. D
    Fifty percent of the account value must be liquidated immediately and distributed according to the deceased spouse's will.

Answer

The entire account balance automatically passes to the surviving spouse without undergoing probate.
In a Joint Tenants with Rights of Survivorship (JTWROS) account, all joint owners have an undivided equal interest in the account assets. Upon the death of one tenant, the deceased owner's interest automatically transfers to the surviving joint tenant(s), avoiding probate entirely.

Step-by-Step Solution

1
Identify the account ownership structure specified in the scenario.
The account is structured as Joint Tenants with Rights of Survivorship (JTWROS).
Account ownership provisions dictate how assets are held and transferred upon the death of an owner.
2
Determine the legal rights associated with the right of survivorship in a joint account.
Assets bypass probate and transfer directly to the remaining surviving owner.
JTWROS explicitly grants surviving tenants full ownership of account assets upon an owner's death.

Key Concept

Rights of Survivorship in JTWROS Accounts
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Topics

Customer Account Types and Ownership Structures