Quick Answer
Registration decides what happens at death: Joint Tenants with Rights of Survivorship (JTWROS) and Tenancy by the Entirety avoid probate, Tenants in Common and individual accounts pass through the estate, and Transfer on Death names beneficiaries directly. Day-trading accounts need approval and a risk disclosure. Know the ownership, the probate result, and the numbers.
The whole unit on one sheet: account registration, inheritance, day-trading rules, wealth events, and account transfers.
How Does Registration Determine Who Inherits?
- Individual: one owner; assets pass through the estate (probate) unless a Transfer on Death (TOD) beneficiary exists.
- JTWROS (Joint Tenants with Rights of Survivorship): equal, undivided shares; survivor inherits automatically; avoids probate.
- TIC (Tenants in Common): shares can be unequal; a deceased owner's share passes to their estate; subject to probate.
- TBE (Tenancy by the Entirety): married couples only, certain states; survivor inherits automatically; creditor protection.
- Community property: married couples only (~9 states); typically 50/50; both spouses get a step-up in basis.
- All joint owners sign the new account form; any joint tenant can typically place trades; checks payable to all owners.
Exam Tip: Gotchas
Step-up in basis resets cost basis to fair market value at death. The heir does not inherit the original purchase price; only later growth is taxable. Community property doubles the step-up to both halves, not just the decedent's share.
Which One-Liners Win Points?
- JTWROS and TBE avoid probate. TIC and individual accounts do not. The words "probate" or "estate" point to TIC.
- TOD supersedes a will. If the will and TOD conflict, the TOD wins; the only exception is a court order. Beneficiaries have no rights while the owner is alive.
- TIC allows unequal ownership; JTWROS is always equal.
- Community property gives a full step-up on BOTH halves. Other joint forms step up only the decedent's share.
- The partnership agreement names who may trade. A general partner normally has that authority and a limited partner normally does not, but a limited partner the agreement names is authorized. A corporate account needs a corporate resolution, not a verbal request.
- A fee-based account (percentage of assets under management) suits active traders; commission-based suits buy-and-hold; a fee-based account can be unsuitable for a low-activity customer under Regulation Best Interest.
- The receiving firm initiates an Automated Customer Account Transfer (ACAT); the customer signs the Transfer Instruction Form there.
- The delivering firm may take exception only on a ground the rule lists. "Customer retention" is never a valid exception.
Which Numbers Matter Most?
| Item | Value |
|---|---|
| Pattern day trader trigger | 4 or more day trades in 5 business days AND more than 6% of total trades |
| Pattern day trader minimum equity | $25,000 at all times |
| Day-trading buying power | 4x maintenance margin excess (vs. standard 2x) |
| Margin call deadline (day trading) | 5 business days to deposit |
| Failure to meet the call | Cash-available-only trading for 90 days |
| Day-trading risk-disclosure warning figure | less than $50,000 impairs a day trader |
| Free-riding freeze (Regulation T) | 90 days |
| ACAT validation window | 1 business day |
| ACAT completion after validation | within 3 business days |
| Customer copy of account record | within 30 days of opening, then every 36 months; a fresh 30-day copy only for a name/address or investment-objective change |
| Negotiable-instrument authorization records | kept 3 years after authorization expires |
| Account information retention | 6 years after account closes or information updates |
| Institutional account asset threshold | $50 million or more, or a bank/insurer/registered fund/registered adviser |
| No-day-trading agreement broken: approval deadline | as soon as practicable, no later than 10 days (calendar, not business) |
Exam Tip: Gotchas
The trusted contact person is optional for the customer, but the disclosure about it is not. The firm must give a written TCP disclosure at account opening even if the customer declines to name one, and institutional accounts are exempt from the TCP requirement entirely.
What Is the Memory Aid for Account Titling?
- JTWROS = "Right Of Survivorship" (survivor gets all, avoids probate)
- TIC = "In Common" (your share goes to your estate, requires probate)
- TBE = "By the Entirety" (married only, both must agree)
Which Gotchas Trip Students Up?
- The day-trading approval rule only applies to firms that promote day trading. Promoting includes advertising, website content, seminars, or direct outreach. Net worth for the appropriateness determination excludes the family residence.
- The $50,000 disclosure figure is a warning, not a regulatory minimum, often confused with the $25,000 pattern-day-trader equity minimum. The risk disclosure must be delivered before the account opens.
- Pattern day trader requires BOTH table conditions. Missing either one means the customer is not a pattern day trader.
- The 3-day ACAT clock runs from validation, not from the request, so the minimum is 4 business days from initiation.
- Re-registration at the same firm still needs principal approval plus supporting documents (trust papers, death certificate, court order). The customer does NOT sign the new account form; the principal who accepts the account does.
One-Breath Recap
Registration is the whole game: Joint Tenants with Right of Survivorship and Tenants by the Entirety hand assets to the survivor and skip probate, Tenants in Common and individual accounts run through the estate, and a Transfer on Death beats a will every time. Day-trading accounts demand approval plus a risk disclosure, inherited securities step up to fair market value at death, and the receiving firm drives an Automated Customer Account Transfer. Lock the ownership, the probate result, and the numbers and this unit answers itself.
Need more than the recap? Read the full Account Types and Registration unit.