Tenants In Common

Two business partners want an account where each owns a specific, unequal percentage and, at death, a partner's share passes to that partner's estate. Which registration fits?

1. A.Tenants in common (TIC)Correct — TIC allows unequal ownership and passes a deceased owner's share to the estate.
2. B.Individual accountAn individual account has a single owner and cannot hold two partners with separate percentages.
3. C.Joint tenants with right of survivorship (JTWROS)JTWROS passes the share to the survivor, not the estate, and typically assumes equal ownership.
4. D.Custodial accountA custodial account is for a minor beneficiary, not two adult business partners.

Why: Tenants in common (TIC) allows unequal ownership percentages, and a deceased owner's share passes to that owner's estate rather than to the other tenant.

Two sisters open a brokerage account together as JOINT TENANTS WITH RIGHT OF SURVIVORSHIP. One sister dies. Regarding her interest in the account:

1. A.The account is frozen permanently until a probate court issues distribution instructionsBecause the transfer happens by operation of the survivorship feature, no probate order is needed to move the interest.
2. B.It passes to her estate and is distributed under the terms of her willThat is how tenants in common works. A survivorship account transfers directly to the surviving owner.
3. C.It is divided equally between the surviving sister and the deceased sister's heirsNo division occurs. The entire interest passes to the surviving joint tenant.
4. D.It passes automatically to the surviving sister, outside her probate estateCorrect. Automatic transfer to the survivor is exactly what the right of survivorship provides, which is why the interest bypasses probate.

Why: In a joint tenancy with right of survivorship, the deceased tenant's interest passes automatically to the surviving tenant or tenants, outside the probate estate. That automatic transfer is the defining feature of the account type and the reason people choose it. It contrasts with tenants in common, where a deceased tenant's share passes to her estate and is distributed under her will or the intestacy laws. The clue is the account title itself, which states the survivorship feature. Review the topic on account registration types.

In a joint account registered as tenants in common, when one owner dies, that owner's share...

1. A.requires the account to be liquidated immediatelyThere is no immediate-liquidation requirement.
2. B.converts the account to an individual account for the survivorThe deceased share goes to the estate, not to the survivor.
3. C.passes to the deceased owner's estate, not automatically to the survivorCorrect — that is how tenants in common works.
4. D.passes automatically to the surviving ownerAutomatic transfer to the survivor is JTWROS, not tenants in common.

Why: In tenants in common, a deceased owner's share passes to their estate rather than automatically to the survivor.

Two business partners, Halvard and Renata, open a brokerage account registered as tenants in common, with Halvard holding a 70% interest and Renata 30%. Halvard dies in March. Regarding his 70% interest, the agent should understand that it:

1. A.Passes to Halvard's estate for distribution under his will or state intestacy law, not to RenataCorrect. Tenants in common lacks a survivorship feature, so the decedent's fractional interest goes to his estate.
2. B.Reverts to the broker-dealer to be held in suspense until a court appoints a receiver for the accountFirms restrict the account pending documentation, but ownership is determined by the registration and the decedent's estate.
3. C.Passes automatically to Renata, who becomes the sole owner of the entire accountThat is the result under joint tenants with right of survivorship, which is a different registration.
4. D.Is divided equally between Renata and Halvard's estate, because co-tenants share losses equally regardless of contributionTenants-in-common interests are held in the stated percentages, and none of Halvard's share passes to Renata.

Why: In a tenants-in-common registration, each owner holds a divisible interest that passes to that owner's estate at death rather than to the surviving co-tenant. This is the defining difference from joint tenants with right of survivorship.