Brokerage Accounts and Features Vocabulary

Vocabulary flashcards covering account registrations, fiduciary rules, joint ownership structures, discretionary management, custodial rules, and power of attorney features based on the transcript.

Individual Account

An account owned by one person, determined by factors such as ownership and taxation.

Transfer on Death (TOD)

An account registration with a named beneficiary that allows assets to avoid probate and pass directly to the beneficiary upon the owner's death.

Probate Court

The legal process used to oversee estate administration and distribute assets after someone dies.

Testate

Having a valid will in place prior to death.

Executor of an Estate

A person appointed in a will to handle a decedent's estate.

Intestate

Not having a valid will prior to death.

Administrator of an Estate

A person appointed by a probate court to reside over the estate of someone who died intestate.

Inheritance Tax Waiver

A state-issued document confirming that estate tax requirements are being handled properly by beneficiaries, executors, or administrators.

Letters Testamentary

Court appointment documents used for confirmation of authority to act on behalf of an estate where a valid will exists (testate).

Letters of Administration

Court appointment documents used for confirmation of authority to act on behalf of an estate where a valid will does not exist (intestate).

Joint Account

A brokerage account that has more than one owner.

Joint with Rights of Survivorship (WROS)

A joint account type giving equal ownership rights to all owners, where if one owner dies, the surviving owner(s) automatically own the account and avoid probate.

Community Property with Right of Survivorship (CPWROS)

A form of joint ownership available only to married couples in certain community property states, combining community property rules with survivorship so assets pass automatically to the surviving spouse without probate or passing through a will.

Tenants in Common (TIC)

A joint account type that assigns specific ownership percentages to each owner, where a deceased owner's percentage becomes part of their estate and goes through probate.

Fiduciary

A third party who oversees another person's assets and is required to put the client's interests ahead of their own.

Uniform Prudent Investor Act (UPIA)

The governing law for fiduciary accounts requiring fiduciaries to invest with a holistic portfolio view and emphasizing diversification.

Diversification

Spreading investments across multiple asset classes and securities to reduce non-systematic risk.

Non-systematic Risk

Risk tied to a specific company, industry, or narrow segment of the market.

Discretionary Account

An account where a financial professional is granted power of attorney (POA) to make investment decisions and place trades without prior approval for each transaction.

AAA Rule

A rule specifying that if a financial professional chooses the Asset, Action, or Amount of a trade, the order is discretionary and requires POA.

Wrap Account

An investment advisory product that bundles investment management and account maintenance services into a single fee, typically charged as an assets under management (AUM) fee.

UGMA (Uniform Gifts to Minors Act)

A custodial account registration that requires the custodian to transfer control of assets to the minor at the age of majority (usually 18 or 21).

UTMA (Uniform Transfer to Minors Act)

A custodial account registration created after UGMA that allows the custodian to delay transferring control of assets to the minor up to age 25.

Guardianship Account

An account opened when a court appoints a guardian to oversee assets for an individual who cannot manage their own finances, such as due to mental incapacitation.

Limited POA

A trading authorization feature that allows a third party to buy and sell securities in an account, but does not allow withdrawals.

Full POA

A trading authorization feature that allows a third party to buy and sell securities and request withdrawals from an account.

Non-durable POA

A power of attorney authorization that ends if the account owner becomes incapacitated.

Durable POA

A power of attorney authorization that remains in effect even if the account owner becomes incapacitated.