Individual Brokerage
An Individual Brokerage account that has the name of one, and only one account owner
Joint Brokerage Account
Joint Brokerage Accounts are most common between spouses but may be utilized for parents, kids, or others with mutual financial goals.
Here are the three types:
- Joint Tenants with Rights of Survivorship: Each owner has equal rights to the account. Each member has the right to conduct trades, make deposits and withdrawals, and take other actions related to their investments (whether this is a good or bad thing). If one owner dies, the surviving owner receives the whole account. A benefit of this account is the ease of estate planning.
- Tenants in Common: Each person owns a percent of the account. If one owner dies, their share does not go to the surviving owner (like the account above) rather goes to the deceased estate. Typically, all actions like withdrawals or adding features to the account requires each owners’ signatures.
- Community Property: Exclusive to a married couple where assets acquired during the marriage are held 50/50. Similar to a TIC (tenants in common) account, the deceased assets go to their estate. There are only a handful of states where these are available like AZ, CA, ID, LA, NM, NV, TX, WA and WI.
Some risks to consider:
- Joint accounts are often subject to claims from creditors of either account holder. Should a creditor come knocking, everyone on the account can be liable.
- Each member can trade on the accounts. Make sure everyone is comfortable with that.
- Gift tax rules may be triggered if one owner makes a large deposit and the other has access to it as a withdrawal
