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Difficulty: HardCustomer Account Types and Ownership Structures

An investor maintains an individual account with a Transfer on Death (TOD) designation naming her adult son as beneficiary. She also holds a joint account with her brother designated as Tenants in Common (TIC) with equal ownership shares. Upon the investor's death, a registered representative is reviewing the required procedures for settling these accounts. Which of the following statements regarding the transfer of assets for these two accounts are correct?

  1. Assets in the individual TOD account pass directly to the designated beneficiary without undergoing probate.Answer
  2. B
    The deceased investor's portion of the TIC account automatically transfers to the surviving brother upon presentation of a death certificate.
  3. The surviving brother maintains his legal right to his specific percentage share of the assets in the TIC account.Answer
  4. D
    The TOD designation overrides any existing TIC account agreement, transferring the brother's equity share to the son.

Answer

The correct statements are that assets in the individual TOD account pass directly to the beneficiary without probate, and the surviving brother retains his designated percentage share of the TIC account.
Transfer on Death (TOD) registrations allow individual account assets to bypass estate probate and transfer directly to the named beneficiary. In a Tenants in Common (TIC) account, each tenant holds a distinct share that passes to the decedent's estate, while the surviving tenant retains their own percentage share.

Step-by-Step Solution

1
Analyze the legal structure of the Transfer on Death (TOD) individual account.
TOD accounts allow account holders to specify beneficiaries who receive ownership of account assets immediately upon death, bypassing probate court proceedings.
TOD rules govern non-probate asset transfers for designated individual accounts.
2
Analyze the legal structure of the Tenants in Common (TIC) joint account.
Unlike Joint Tenants with Rights of Survivorship (JTWROS), TIC accounts do NOT convey survivorship rights to co-tenants. The deceased tenant's share becomes part of their estate.
TIC accounts preserve distinct ownership proportions that transfer via estate probate/will, not to surviving account owners.
3
Evaluate the surviving tenant's rights in the TIC account.
The surviving brother maintains ownership of his original proportion of the assets in the TIC account.
A co-tenant's death does not forfeit or alter the surviving owner's existing equity interest.

Key Concept

Distinction between TOD non-probate transfers and TIC estate inheritance rules
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Topics

Customer Account Types and Ownership Structures