Account Types and Registration

The whole unit on one sheet: how accounts are registered, who inherits, the day-trading rules, wealth events, and moving accounts between firms.

Registration and 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.

The One-Liners That 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.
• General partners can trade; limited partners cannot. 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 Initiation Form there.

Numbers to Lock In

Memory Aid: 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)

Top 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.
• 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 conditions: 4 or more day trades in 5 business days AND more than 6% of total trades. Missing either means the customer is not a pattern day trader.
• ACAT completes within 3 business days after validation, not from the initial request; the delivering firm gets 1 business day to validate first, 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 registered representative and a principal both do.

One-Breath Recap

Registration is the whole game: JTWROS and TBE hand assets to the survivor and skip probate, TIC 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 ACAT transfer. Lock the ownership, the probate result, and the numbers and this unit answers itself.

Need more than the recap? This is a condensed summary. If it is not enough, read the full Account Types and Registration unit for the complete lesson.