- Picking a Firm
- Opening an Account
- Types of Accounts
- The Importance of Title
- Placing an Order
- Order Duration
- The Entrance Fee
Importance of Title
The name and title on an
account declares ownership, usage, purpose and transfer rights. Don’t underestimate
its importance! Many family feuds involve assets rights. Here are the
– An account with the name of one individual as owner. Upon the death of
the owner, the assets pass through probate in accordance with the terms of
the owner’s will. If the individual dies with creditors, they can claim
Accounts – The P.O.D.
designation makes an account an informal trust. The beneficiary will
receive the assets in the account, upon the principal’s death. The P.O.D.
designation is an easy and inexpensive way of transferring assets, upon
death, by avoiding the time and expense of going through probate court.
Beneficiaries are not joint owners. The owner still controls the assets in
the account without restrictions, and can spend them, change the
beneficiary, and use the assets as he or she chooses.
- Joint Tenants with
Rights of Survivorship – An
account owned by two or more persons of legal age. Each owner can
authorize transactions on behalf of the other owners. Liabilities on the
account are normally joint and several. If one of the joint tenants
becomes incapacitated, the remaining ones can still conduct business
because of their concurrent ownership rights. Upon the death of one owner,
the assets are automatically passed to the surviving owners, with the
deceased’s estate having no further interest in the account. Upon the
surviving owners presenting a death certificate to the brokerage firm, the
deceased owner will be removed from the account. A will does not dictate
property distribution. If the deceased has creditors, however, they can
claim the deceased’s portion of the account. The joint ownership structure
can supersede wills, trusts and premarital agreements.
- Tenants in Common
- An account owned by two or more persons of legal age with no right of
survivorship. Upon the death of an owner, the account, and its assets,
passes to the estate of the deceased. The deceased’s assets must pass
through probate court and the distribution is dictated by the will. If the
owner dies with creditors, they can claim the deceased’s portion of the
account. The joint tenant is not a beneficiary. They have ownership rights
that can not be taken back.
- Joint Community
Property – Represented by
husband and wife accounts, where the owners have equal rights to the
assets in the account. These accounts are only available in states that
recognize joint community property. Upon the death of one owner, the will
dictates the disbursement of assets. Each spouse has ownership of his/her
portion of the assets in an account, and can leave them to a beneficiary
of choice. There are no rights of survivorship.
- Custodial Account
for a Minor – Used by custodians
to invest on behalf of children who are not of legal age.
- Corporation or LLC
Account – These are accounts
where the customer is a corporation or LLC. These types of legal entities
are commonly used for asset protection and estate planning. Normally, when
corporate accounts are opened, the brokerage firm requires that the
corporation’s charter reflects that the corporation is legally empowered
to purchase securities. A Board of Director’s resolution will also be
needed, authorizing specific officers to conduct transactions on behalf of
Partnership Account -
This is when
the customer is operating under a signed partnership agreement.
Placing an Order.