SkarpChapter 17 of 27
Customer and Account Types: Individuals, Entities, and Registrations
Walk through the many ways accounts can be titled—from individual and joint to corporate and trust—and see how ownership drives documentation and permissions.
Big Picture: Why Account Titling Matters
Why Titling Matters
Account titling determines who controls assets, what documents are needed, and how money passes at death. It is central to both SIE questions and real-world practice.
Regulatory Context
We focus on U.S. brokerage and advisory accounts as of mid-2026, under SEC and FINRA practice. Firms must rely on written evidence, not verbal claims.
Key Exam Themes
You must distinguish individual, joint, and community property accounts; know who can trade; recognize documentation for entities and trusts; and grasp IRAs, 529s, and TOD designations.
Think Like a Rep
Always ask: given this account title and these documents, what am I allowed to do, and for whom? Authority and documentation must line up.
Individual Accounts: The Simplest Ownership
What Is an Individual Account?
An individual account has one natural person as owner. That person alone has full authority to trade, deposit, and withdraw, unless formal powers of attorney are on file.
Control and Powers of Attorney
Only the owner can act, unless a limited or full power of attorney is documented. LPOA allows trading only; FPOA allows trading and withdrawals. Both end at the owner’s death.
Estate and Beneficiaries
Without a TOD or similar designation, assets usually pass through probate under state law. Beneficiary designations on non-retirement accounts are optional but increasingly used.
Common Exam Traps
Spouses and friends have no automatic authority. The firm’s KYC and suitability focus on the account owner, not unrelated people, unless they have a formal role.
Joint Accounts: JTWROS vs. TIC vs. Community Property
What Is a Joint Account?
A joint account has two or more owners who all sign the new account forms. Joint accounts are common for spouses, partners, or family members sharing investments.
JTWROS
Joint Tenants with Right of Survivorship: owners share an undivided interest. When one dies, their interest passes automatically to the surviving owner(s), bypassing probate.
TIC
Tenants in Common: each owner has a specific percentage. At death, that share goes to the deceased owner’s estate or beneficiaries, not automatically to co-owners.
Community Property
In community property states, most marital property is jointly owned. Some states add survivorship. On the exam, know it is a state-law ownership concept.
Authority and Traps
Either joint owner may trade unless restricted, but withdrawals often require all signatures. JTWROS has survivorship; TIC does not. Joint accounts with minors are avoided.
Worked Scenarios: Individual vs Joint vs Community Property
Scenario 1: JTWROS
Dana and Lee open a JTWROS account. Either can trade; checks go to both. At Dana’s death, Lee automatically becomes sole owner, regardless of Dana’s will.
Scenario 2: TIC
Omar and Priya open a 50/50 TIC. Either can trade. When Omar dies, his 50% goes to his estate, not automatically to Priya. The firm needs estate documents to retitle.
Scenario 3: Community Property State
Alex opens an individual account while married in a community property state. Only Alex can trade. Community property rules affect division later, not day-to-day authority.
Key Takeaway
For the SIE, focus on how the title (individual, JTWROS, TIC) determines who can trade and how assets transfer at death, separate from marital property claims.
Entity Accounts: Corporations and Partnerships
Who Is the Customer?
In entity accounts, the customer is the business itself, not any individual. The firm must verify the entity’s existence and who may act for it.
Corporate Accounts
For corporations, firms collect articles of incorporation, a corporate resolution naming authorized traders, and the entity’s EIN. The resolution must allow margin if margin is requested.
Partnership Accounts
For partnerships, firms review the partnership agreement and any resolution specifying who can trade. General partners usually have authority; limited partners typically do not.
Exam Focus
On the SIE, know that the entity is the customer and that trading authority comes from written resolutions or agreements, not job titles alone.
Trust and Fiduciary Accounts
What Is a Trust Account?
A trust account is owned by a trust, managed by a trustee, for beneficiaries. The trust, not the individual trustee, is the customer.
Key Trust Roles
Grantor creates and funds the trust, trustee manages assets, and beneficiaries receive economic benefits. Only trustees may trade in the account.
Trust Documentation
Firms need the trust agreement or a certificate showing trust name, date, trustees, and trustee powers, including whether margin or options are allowed.
Other Fiduciary Accounts
Estate, guardianship, and conservatorship accounts are also fiduciary. Authority comes from court or legal documents, not from the beneficiary.
Tax-Advantaged Accounts: IRAs and 529 Plans
Why Tax-Advantaged Accounts?
These registrations, like IRAs and 529 plans, receive special tax treatment to encourage retirement and education saving, and have unique rules and roles.
Traditional vs Roth IRA
Traditional IRAs may allow deductible contributions with tax-deferred growth and taxable withdrawals. Roth IRAs use after-tax money, but qualified withdrawals are tax-free.
IRA Ownership and Beneficiaries
IRAs are individual only—no joint IRAs. The owner controls investments and names beneficiaries, who face specific distribution rules after SECURE and SECURE 2.0.
529 Plans
529 plans are state-sponsored for education. The account owner controls investments and may change beneficiaries; earnings grow tax-deferred, with tax-free qualified withdrawals.
Exam Perspective
Treat IRAs and 529s as account registrations with special tax and control rules. Know who owns, who benefits, and whether joint ownership is allowed.
Beneficiaries, Transfer-on-Death, and Titling Risks
Beneficiary Designations
Beneficiaries are named on forms for IRAs, 529s, and some brokerage accounts. These designations usually control over the customer’s will.
Transfer-on-Death (TOD)
TOD lets a brokerage account pass directly to named beneficiaries at death. During life, the owner keeps full control; beneficiaries have no rights.
Titling Risks
JTWROS or old beneficiary forms can unintentionally cut out heirs. Firms follow the account documents unless a court orders otherwise, even after divorce.
Practical Compliance Rule
Act only based on current titles and signed documents. Verbal requests to "treat" the account differently are not enough to change control or beneficiaries.
Quiz 1: Ownership and Authority Basics
Test your understanding of individual vs joint and entity authority.
A married customer, Jordan, opens an individual margin account at a broker-dealer. Jordan’s spouse, Casey, calls to place a trade, stating, "It’s our money; we file joint taxes." No power of attorney is on file. How should the registered representative respond?
- Accept the order because spouses share ownership of marital assets
- Accept the order only if the trade is small relative to the account value
- Refuse the order because Casey has no documented authority on the account
- Accept the order but require Jordan to confirm it later the same day
Show Answer
Answer: C) Refuse the order because Casey has no documented authority on the account
This is an individual account. Only the named owner (Jordan) or someone with documented authority (e.g., power of attorney) may trade. Marital status and joint tax filing do not create trading authority, so the order must be refused.
Quiz 2: JTWROS vs TIC and Entities
Check how well you can distinguish joint and entity registration features.
Which statement is MOST accurate for SIE purposes?
- In a JTWROS account, a deceased owner’s share passes to their estate, not to the surviving owner
- In a TIC account, each owner’s share passes according to their estate plan, not automatically to the other owners
- In a corporate account, the CEO may always trade because they are the highest officer
- In a partnership account, limited partners usually have trading authority while general partners do not
Show Answer
Answer: B) In a TIC account, each owner’s share passes according to their estate plan, not automatically to the other owners
In a Tenants in Common (TIC) account, each owner’s share is separate and passes according to their estate plan or state law. JTWROS has survivorship to the co-owner. Corporate trading authority depends on written resolutions, and general partners, not limited partners, usually have authority in partnership accounts.
Thought Exercise: Match the Registration to the Situation
Work through these short prompts and decide which registration type best fits. Then compare to the suggested answer.
- Grandparent saving for college
- Mei wants to save for her 3-year-old grandson’s future college expenses, but she wants to keep control and maybe change the beneficiary if needed.
- Which registration is most appropriate: individual brokerage account in the child’s name, UTMA custodial account, or 529 plan owned by Mei?
- Suggested answer: A 529 college savings plan with Mei as owner and the grandson as beneficiary. She keeps control, can change the beneficiary within rules, and gets education-related tax benefits.
- Two unrelated investors, separate heirs
- Carlos and Nina invest together but want their respective shares to go to their own families, not to each other, when they die.
- JTWROS or TIC?
- Suggested answer: TIC, so each person’s share passes to their own estate or beneficiaries.
- Small corporation trading its cash reserves
- BrightByte, Inc. wants to invest excess cash in a brokerage account.
- Who is the customer, and what documentation is key?
- Suggested answer: The corporation is the customer. The firm needs corporate documents, including a resolution naming who can trade and authorizing any margin or options activity.
- Parent opening an IRA for a college-age child with earned income
- Can the parent open a joint IRA with the child? If not, what can they do?
- Suggested answer: No joint IRAs. The IRA must be in the child’s name. The parent can help fund it (within contribution limits) or assist with paperwork, but the account is individually owned.
Key Term Flashcards: Account Types and Roles
Flip through these cards to reinforce core terms and distinctions.
- Individual account
- A brokerage or advisory account with one natural person as the sole owner. Only that person (or someone with documented power of attorney) may trade or withdraw.
- Joint account
- An account with two or more owners. All owners sign the new account agreement. Either owner may usually trade, but survivorship and inheritance depend on the specific form (JTWROS vs TIC).
- JTWROS
- Joint Tenants with Right of Survivorship: each owner has an undivided interest; at death, a deceased owner’s interest passes automatically to the surviving owner(s), bypassing probate.
- Tenants in Common (TIC)
- Joint ownership where each owner has a specific percentage interest. At death, an owner’s share passes to their estate or beneficiaries, not automatically to co-owners.
- Community property (exam context)
- A state-law marital property system where most property acquired during marriage is jointly owned by spouses. It affects division at divorce or death, but trading authority still follows account title.
- Corporate account
- An account where the customer is a corporation. The firm relies on corporate documents and resolutions to identify authorized traders and whether margin/options are allowed.
- Partnership account
- An account for a partnership, typically using the partnership agreement and resolutions to determine who may trade. General partners usually have authority; limited partners generally do not.
- Trustee
- The person or institution with legal authority to manage assets in a trust account, according to the trust document, for the benefit of named beneficiaries.
- Traditional IRA vs Roth IRA (high level)
- Traditional IRA: may allow deductible contributions with tax-deferred growth and taxable withdrawals. Roth IRA: after-tax contributions, with tax-free qualified withdrawals if rules are met.
- 529 plan
- A tax-advantaged, state-sponsored account for education savings. The account owner controls investments and beneficiary changes; qualified education withdrawals are generally federal tax-free.
- Transfer-on-Death (TOD) registration
- A feature that lets a non-retirement brokerage account pass directly to named beneficiaries at the owner’s death, bypassing probate, while leaving full control with the owner during life.
Key Terms
- 529 plan
- A tax-advantaged, state-sponsored education savings account in which an owner invests for a named beneficiary’s qualified education expenses.
- beneficiary
- A person or entity designated to receive assets from an account, trust, or insurance contract, especially upon the owner’s death.
- joint account
- An account with two or more owners who all sign the agreement. Either owner may usually trade, but survivorship and inheritance depend on the specific form, such as JTWROS or TIC.
- trust account
- An account owned by a trust, managed by a trustee for named beneficiaries, with authority and investment powers defined in the trust document.
- corporate account
- An account where the customer is a corporation, using the corporation’s name and EIN, with authorized traders identified through corporate resolutions and other documents.
- fiduciary account
- An account in which one party (such as a trustee, executor, or guardian) manages assets for the benefit of another, owing duties of loyalty and care.
- community property
- A marital property system, in certain U.S. states, where most property acquired during marriage is jointly owned by spouses. It affects division at divorce or death but does not by itself grant trading authority on an account.
- individual account
- A brokerage or advisory account with one natural person as the sole owner. Only that person (or someone with documented power of attorney) may trade or withdraw.
- partnership account
- An account opened in the name of a partnership, with trading authority and other powers defined in the partnership agreement and any partnership resolutions.
- Tenants in Common (TIC)
- A form of joint ownership where each owner has a specific percentage interest, and at death, that share passes to the owner’s estate or beneficiaries, not automatically to co-owners.
- power of attorney (POA)
- A legal document authorizing one person to act on another’s behalf. In brokerage accounts, it can be limited (trading only) or full (trading and withdrawals).
- Individual Retirement Account (IRA)
- A tax-advantaged individual account for retirement savings; includes traditional and Roth forms with different contribution and distribution tax rules.
- Transfer-on-Death (TOD) registration
- An account registration that allows assets to pass directly to named beneficiaries at the owner’s death, outside of probate, while leaving full control with the owner during life.
- Joint Tenants with Right of Survivorship (JTWROS)
- A form of joint ownership where each owner has an undivided interest and, at death, a deceased owner’s interest passes automatically to the surviving owner(s), bypassing probate.