The Account Title Decides Where the Money Goes

When one owner of a joint account dies, what happens next depends on how the account was titled. In a joint tenancy with right of survivorship, the surviving owner automatically becomes the sole owner, outside the will and outside probate; in a tenancy in common, the deceased owner’s share passes to their estate and is distributed under their will or state law.

That single choice, often made in a few seconds when the account was opened, can override a carefully written will. Advisers see the consequences regularly, from smooth transfers between spouses to children unintentionally disinherited because a parent added one sibling to an account.

The title also affects the tax cost basis the survivor receives, which can change the tax due on a later sale by tens of thousands of dollars. For the full route from the exam to a career giving that advice, our complete guide to how to become an investment adviser representative covers every step.

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Joint Tenancy With Right of Survivorship

In a joint tenancy with right of survivorship, often shortened to JTWROS, each owner holds an equal, undivided interest in the whole account. When one owner dies, their interest ends and the surviving owners continue to own the entire account, by operation of law.

Because the transfer happens automatically, the account does not pass through probate and is not governed by the deceased owner’s will. The survivor typically provides the firm with a death certificate and new account paperwork, and the account is retitled in the survivor’s name.

JTWROS is the most common form of joint ownership between spouses. The Series 65 Exam Preparation course at FRC covers every form of account registration the exam tests, including how each one passes at death.

Tenancy in Common

In a tenancy in common, each owner holds a separate share, which does not have to be equal. Two siblings might own an account 60 percent and 40 percent, reflecting what each contributed.

When a tenant in common dies, their share does not go to the other owners. It becomes part of the deceased owner’s estate, passing under their will, or under state intestacy law if there is no will, and usually goes through probate.

Worked example: siblings hold a $500,000 account as tenants in common, 60 percent and 40 percent. When the 60 percent owner dies, his $300,000 share passes to his estate and, under his will, to his children; his sister keeps her $200,000 share and does not inherit his part.

Joint Ownership Types Compared

Tenancy by the Entirety and Community Property

Tenancy by the entirety is a form of joint ownership available only to married couples in some states. It works like JTWROS at death, but neither spouse can sell or borrow against their interest alone, and in many states the property is protected from creditors of just one spouse.

Nine states treat most property acquired during marriage as community property: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Each spouse owns half, and at death the deceased spouse’s half passes under their will unless the account is titled as community property with right of survivorship, which some of those states allow.

The joint account entry in the FRC dictionary explains the account types in more detail. What matters most here is how each one changes the tax result for the survivor.

How Basis Changes When a Joint Owner Dies

When an owner dies, the portion of the account included in their estate receives a new cost basis equal to its market value at death. The rules for how much is included differ between spouses and other joint owners.

For spouses holding property as joint tenants or tenants by the entirety, half of the value is included in the first spouse’s estate, regardless of who paid for it. The surviving spouse’s basis therefore steps up on that half only, while their own half keeps its original basis.

Community property is treated more generously. Both halves receive a new basis at the first spouse’s death, so the whole account can be sold by the survivor with little or no gain, as explained in our article on what cost basis is.

Worked Example: JTWROS vs Community Property for Spouses

A married couple bought shares for $200,000 that are worth $600,000 when the husband dies. The wife sells them soon afterwards and is in the 15 percent long-term capital gains bracket.

Step one: if the shares were held as JTWROS, half the value, $300,000, is included in the husband’s estate and steps up. Her own half keeps its basis of $100,000, so her total basis is $400,000.

Step two: selling for $600,000 creates a $200,000 gain, and at 15 percent the tax is $30,000. Step three: if the shares had been community property, both halves would step up to $600,000, the gain would be zero and she would pay no capital gains tax, a saving of $30,000.

Couples who live, or have lived, in community property states should review how their accounts are titled. The difference can be worth far more on larger, long-held portfolios.

Non-Spouse Joint Owners

For joint owners who are not married, the rule is different. The entire value of the account is included in the first owner’s estate, except for the portion the survivor can show they contributed.

If a parent funded an account entirely and added an adult child as a joint tenant, the whole account is included in the parent’s estate at death, and the child receives a full step-up in basis on the whole amount. Adding a non-spouse as a joint owner can also count as a gift, depending on the type of asset and when the new owner gains the right to withdraw.

With the federal estate tax exemption at $15 million per person for 2026, few families pay estate tax. The inclusion rules still matter, because they decide how much of the account receives a new basis.

Study Account Registrations With FRC

Questions on joint accounts combine legal title, estate rules and tax basis, and the exam often frames them as family scenarios. Our Series 65 course teaches each registration type alongside the tax rules that follow from it, so you can answer these questions with confidence.

Consider studying with FRC for every exam on your route. Explore our USA exam courses, from the SIE through the Series 7, Series 63 and Series 65.

To take advantage of the membership, explore FRC Professional Membership, which gives you a verified Digital Profile that shows employers your real-time course progress, together with the Video Resume. Current offers are on our membership deals page.

When Joint Ownership Overrides the Will

Because JTWROS accounts pass outside the will, they can produce results the deceased never intended. The most common example is a parent who adds one child to an account for convenience, so that child can help pay bills.

Worked example: a widowed mother has an $800,000 brokerage account and a will leaving everything equally to her three children. She adds her eldest daughter as a joint tenant with right of survivorship; at her death, the daughter becomes the sole owner of the whole $800,000, and her two siblings, who each expected about $266,667, receive nothing from that account.

The daughter could choose to share the money, but she is not legally required to, and gifts to her siblings could use up part of her own lifetime gift exemption. A power of attorney or a transfer on death designation usually achieves the mother’s real goal without the risk.

Transfer on Death as an Alternative

A transfer on death registration lets an individual account owner name beneficiaries who receive the account at death, without probate. Unlike joint ownership, the beneficiaries have no rights while the owner is alive, cannot withdraw money and are not exposed to the owner’s creditors or vice versa.

Most states have adopted the Uniform Transfer on Death Security Registration Act, which allows this for brokerage accounts. Beneficiaries can be named in any proportions and changed at any time by the owner.

For many single clients, a transfer on death registration is a cleaner way to avoid probate than adding a joint owner. It keeps control with the owner and leaves the will and the beneficiary designations working together.

Practical Steps When an Owner Dies

The surviving owner or executor should contact the firm with a certified death certificate. For a JTWROS account, the firm will usually retitle the account in the survivor’s name once it receives the death certificate and new account forms; for a tenancy in common, it will usually need court documents showing who has authority over the deceased’s share.

Firms may restrict activity in the account until the paperwork is complete. Survivors should also update their own beneficiary designations and review their asset allocation, because a combined account may no longer fit a single person’s needs.

Retirement accounts are different. An IRA or 401(k) can never be owned jointly and passes by beneficiary designation, as covered in our article on IRA rollover vs IRA transfer, which explains how inherited IRAs must be moved.

The Memory Aid

Remember “JTWROS jumps, TIC ticks to the estate”: a JTWROS share jumps to the surviving owner, while a tenant in common’s share goes to the estate.

For spouses and basis, remember “joint gets half, community gets whole”: JTWROS steps up half the account, community property steps up the whole account.

For non-spouses, remember “who paid, gets taxed”: the whole account is included in the first owner’s estate unless the survivor proves their contribution.

Exam Traps to Avoid

The first trap is assuming a will controls a JTWROS account. The account passes to the surviving owner by law, whatever the will says.

The second trap is assuming tenants in common inherit each other’s shares. Each share passes to the deceased owner’s estate.

The third trap is assuming JTWROS gives a surviving spouse a full step-up in basis. Only the half included in the deceased spouse’s estate steps up, unless the account is community property. The fourth trap is believing a retirement account can be held jointly; IRAs and 401(k)s are always individual accounts.

A Client Scenario

A 70-year-old widower in a non-community property state has a $1.2 million brokerage account and plans to add his son as a joint tenant so the son can manage it if he becomes ill. He has two other children and wants all three to share equally.

The adviser explains that joint ownership would make the son the sole owner at death, overriding the will, and could expose the account to the son’s creditors or divorce. Adding the son might also count as a gift.

The adviser recommends a durable power of attorney so the son can manage the account, combined with a transfer on death registration naming all three children equally. The plan reflects the client’s goals and risk tolerance, and the adviser documents the recommendation as part of the suitability review while encouraging him to confirm the legal steps with his estate attorney.

The Dictionary as a Video Library

The FRC dictionary is a study tool, not just a glossary. Every entry pairs a written explanation with deep-dive video, on-page quizzes and interactive flash cards, so you can read a concept, watch it explained and test yourself in one place.

Rules are covered in the same depth: open a rule and you will find the full explanation alongside video walk-throughs of how it applies in practice. Use the FRC dictionary to open every term in this article as its own explanation, video and quiz, from joint accounts to fiduciary duties.

Practice Questions to Test Yourself

Question one: Two friends own a brokerage account as joint tenants with right of survivorship. One dies, leaving a will that gives everything to her brother. Who owns the account? The surviving friend, because JTWROS property passes to the surviving owner regardless of the will.

Question two: Three siblings own an account as tenants in common, 50, 30 and 20 percent. The 50 percent owner dies. What happens to her share? It passes to her estate and is distributed under her will or state law, usually through probate.

Question three: Spouses in a non-community property state hold shares as JTWROS, bought for $100,000 and worth $300,000 at the first death. What is the survivor’s basis? $200,000: her own half’s $50,000 basis plus the stepped-up $150,000 for the deceased spouse’s half.

Question four: Which form of joint ownership is available only to married couples and can protect property from the creditors of one spouse? Tenancy by the entirety.

Question five: A single client wants to avoid probate but keep full control of her account during her lifetime. What registration suits her best? A transfer on death registration, which names beneficiaries without giving them any rights while she is alive.

Turn Estate Planning Knowledge Into Career Evidence

Account titling looks administrative, but advisers who get it right protect families from costly mistakes. FRC’s Digital Profile shows employers the courses you are actively studying and the progress you have earned through assessed learning, verified by FRC, and a QR code on your resume takes them straight to it.

The FRC Video Resume lets a hiring manager hear you before the interview. Explaining clearly how a joint account can override a will shows the care and judgment that wealth management firms look for.

Candidates returning to the exam should note that the wait after a third failure drops from 180 days to 60 days for exam windows opened on or after January 4, 2027, as explained in our article on the Series 65 retake rule change.

Related Questions

Continue with What Is Cost Basis? for how inherited basis is set, and Short-Term vs Long-Term Capital Gains for how inherited assets are taxed when sold.

For accounts that pass by beneficiary designation, read Traditional IRA vs Roth IRA, and for education savings that pass by owner control, see 529 Plan vs Coverdell ESA.

Key Points to Retain

When a joint owner dies, a JTWROS account passes automatically to the surviving owners outside the will and probate, while a tenant in common’s share passes to their estate. Tenancy by the entirety is a married-couple form with survivorship and creditor protection in some states, and community property gives each spouse half, passing under the will unless held with survivorship.

For spouses, JTWROS steps up the basis on half the account at the first death, while community property steps up the whole account. For non-spouse joint owners, the whole account is included in the first owner’s estate unless the survivor proves their contribution, and a transfer on death registration avoids probate without giving beneficiaries any rights during the owner’s lifetime.

For the exam’s structure and requirements, see the Series 65 dictionary entry, and for the role the exam leads to, read our guide to what an investment advisor representative is.