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Joint Account

A Joint Account is a bank or investment/brokerage account shared between two or more adults. Most Joint Accounts are taxable as opposed to tax-advantaged (e.g. IRA). All Tenants (Account Owners) must sign the account agreement, and any Tenant can enact transactions. Lastly, each Tenant has an undivided interest in the asset/property, whereby each Tenant has an equal right to enjoy the entire asset/property. The two main types of Joint Accounts are JTWROS and TIC, but other types include TBE and Community Property. See the following summary:

  • JTWROS – [Joint] Tenants with Rights of Survivorship

    • Decedent’s assets pass equally to other Owner(s), who survive

    • Interest must be EQUAL amongst Tenants

  • TIC – [Joint] Tenants in Common

    • Decedent’s assets pass to the estate

    • Interest can be UNEQUAL; Each Tenants share is stipulated in account agreement

  • TBE – [Joint] Tenants By Entirety

    • Applies to married couples in some states

    • Decedent’s assets pass completely to the surviving spouse

    • In order for one spouse to modify his or her interest in the property in any way, the consent of both spouses is required.

  • [Joint] Community Property

    • Applies to married couples in some states

    • Decedent’s assets pass completely to the surviving spouse

    • Property acquired by either spouse during the course of a marriage is considered Community Property. For example, an IRA in the name of an individual with a spouse, accumulated during the course of the marriage, would be considered Community Property.

References

 

Investopedia – Tenants by Entirety
Investopedia – Community Property
Wikipedia
TheFreeDictionary

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