The Advantages of Joint Tenacy Brokerage Accounts
While there are different types of joint tenancy accounts, by far the most popular is the titling "joint tenancy with rights of survivorship." Joint tenancy accounts are generally used by a husband and wife, but they are eligible to be established by any individuals. With the specific exception of Individual Retirement Accounts (IRAs), most regular bank and brokerage accounts can be owned by joint tenants.
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Transferability of Assets
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Joint tenancy is one of the few account titles that literally spells out how to handle the assets. "Joint tenants" means that the listed owners are essentially co-owners, and both have the right to conduct business in the account. "Joint tenants with rights of survivorship" plainly states that each owner has a survivor's interest in the account, meaning that upon the death of one of the owners, the other owner simply takes over complete ownership of the account. In most banks and brokerage houses, this is a seamless transition, where one name is usually simply removed from the account. For other accounts, the transferring of assets upon death is often an ordeal, often requiring legal identification of beneficiaries, new accounts being opened, and court orders authorizing asset distribution. Indeed, one of the main reasons that joint tenancy was introduced was in order to ease the transferability of assets upon death.
Two Available Decision-Makers
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One of the main disadvantages of single-name account titling is there is only one person available to get things done. If you are out of the country, not near a phone or fax machine, or otherwise unable to communicate with your account representative, you may not be able to make a trade, transfer funds, or get business done in your account. Sometimes, decisions are thrust upon you and need to be made in a short period of time, and if you are unable to be reached, as a single-name account owner you are simply out of luck. However, if you have a joint tenant listed on the account, this person might be available to service the account in your place.
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Restrictions Allowed
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While most joint tenancy accounts are set up to facilitate account access, some owners use joint tenancy as a way of restricting one of the partners. Specifically, most joint tenancy accounts allow either user to enter trades or distribute funds, but some are set up so that both parties must agree to any business transacted in the account. For example, sometimes a parent will establish a joint tenancy account with a child over the age of 18, but won't want to give them complete control over the funds in the account. Other times, spouses want to ensure that both are involved with any major financial decisions. In any case, joint tenancy can be set up to prevent one owner from having complete control over the account.
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