Examkin

Question

Difficulty: EasyCustomer Account Types and Ownership Structures

Two business partners open a joint brokerage account designated as Tenants in Common (TIC). Which of the following statements regarding the rules and ownership structure of this account are CORRECT?

  1. The account allows for unequal ownership percentage shares between the joint owners.Answer
  2. B
    Upon the death of one joint owner, their share of the account assets automatically passes to the surviving owner.
  3. Either joint owner has the authority to enter trade orders independently for the account.Answer
  4. D
    Checks issued from the account may be made payable solely to the owner who requested the withdrawal.

Answer

The correct statements are that Tenants in Common (TIC) accounts allow unequal ownership percentages between owners, and that either owner may independently enter trade orders for the account.
Tenants in Common (TIC) accounts allow owners to divide interest in unequal shares and allow any single account owner to execute trade orders. Therefore, statements identifying unequal ownership split capabilities and independent trading authority are correct.

Step-by-Step Solution

1
Analyze ownership distribution rules for Tenants in Common (TIC) accounts.
TIC accounts permit flexible, unequal percentage ownership (e.g., 60% and 40%), unlike JTWROS which requires equal ownership.
Ownership structure flexibility is a primary operational distinction of TIC accounts.
2
Evaluate trading authority rules for joint brokerage accounts.
Either co-owner in a joint account possesses individual trading authority to execute transactions.
FINRA customer account rules grant trading privileges to any designated account owner unless specific restrictive covenants exist.
3
Examine survivorship provisions and check disbursement regulations for TIC accounts.
Upon death, a TIC owner's assets pass to their estate rather than the surviving owner. Furthermore, all checks payable from a joint account must bear the names of all joint tenants.
This avoids unauthorized asset transfers and ensures estate probate handling.

Key Concept

Tenants in Common (TIC) Account Ownership Rules
Rate this question

Topics

Customer Account Types and Ownership Structures