Types of Ownership

How an account is titled determines who controls the assets, who can make transactions, and what happens when an owner dies. The exam tests four primary forms of joint ownership.

Ownership Forms Comparison

Memory Aid:

• JTWROS = "Right Of Survivorship" (survivor gets all)
• TIC = "In Common" (your share goes to your estate)
• TBE = "By the Entirety" (married couples only)

Joint Tenants with Right of Survivorship (JTWROS)

• Most common form of joint ownership for investment accounts
• All owners have equal, undivided interest
• When one owner dies, their share passes automatically to the surviving owner(s)
• Bypasses probate; assets transfer by operation of law
• Any owner can typically trade in the account
• Not limited to married couples; any two or more persons can hold JTWROS
• Checks/distributions must be made payable to all owners

Key Exam Point: In JTWROS, each owner has an equal share regardless of who contributed the funds. If three people own an account as JTWROS and one dies, the two survivors each own 50%.

Exam Tip: Gotchas

• JTWROS vs TIC at death: JTWROS passes to survivors automatically (no probate). TIC passes to the deceased's estate (requires probate). This is the most-tested distinction.
• Any owner can liquidate without the others' consent. Equal ownership does not mean equal control over transactions.

Tenants in Common (TIC)

• Each owner holds a specific, divisible share (e.g., 60/40 split)
• Shares do not have to be equal
• No right of survivorship
• When an owner dies, their share passes to their estate (not to the other owners)
• Each owner can sell, gift, or bequeath their share independently
• Requires probate for the deceased owner's share

Think of it this way: TIC is the "independent" form of ownership. Each person owns their piece outright. When they die, their piece goes where their will says, not automatically to the other owner.

Exam Tip: Gotchas

• TIC does NOT have right of survivorship. A deceased owner's share goes to their estate, not to the other co-owners. An owner's will controls disposition, not the account title.

Tenancy by the Entirety (TBE)

• Available only to married couples (recognized in roughly half of U.S. states)
• Both spouses have equal, undivided ownership
• Right of survivorship (like JTWROS, but only for spouses)
• Both spouses must consent before either can sell, transfer, or encumber the property
• Provides the strongest creditor protection of all joint ownership forms; a creditor of only one spouse generally cannot attach the property
• Dissolved by divorce, mutual agreement, or death

Key Exam Point: TBE offers stronger protection than JTWROS because neither spouse can unilaterally transfer their interest, and individual creditors of one spouse typically cannot reach the asset.

Exam Tip: Gotchas

• TBE requires marriage. If the couple divorces, TBE automatically converts to TIC in most states.
• TBE vs JTWROS creditor protection: In JTWROS, an individual creditor can pursue one owner's share. In TBE, they generally cannot, because neither spouse holds a separable interest.

Community Property with Right of Survivorship (CPWROS)

• Available only in community property states: AZ, CA, ID, LA, NV, NM, TX, WA, WI (plus AK as opt-in)
• Property acquired during marriage is owned equally by both spouses
• With WROS election, surviving spouse receives full ownership at death
• Provides a unique tax advantage: both halves of community property receive a stepped-up basis at the first spouse's death

Think of it this way: Community property means "what's earned during the marriage belongs to both." CPWROS adds the survivorship feature so assets pass directly to the surviving spouse without probate.

Exam Tip: Gotchas

• Community property stepped-up basis: Both halves of community property get a step-up at the first spouse's death. JTWROS only gives a step-up on the deceased's half. This is a significant tax planning difference.
• CPWROS is only available in 9 states. Do not confuse with TBE, which is available in more states.