Shared Goals and Growth

Shared
goals and growth

Markets
& Investing

Joint
brokerage accounts offer a collaborative approach to investing.

When it
comes to investing, you don’t have to do it alone. Whether you’re planning for
the future with your spouse, growing wealth with a family member, or expanding
your goals alongside a business partner, a joint brokerage account allows you
to share the opportunities and responsibilities that come with growing your
money together.

What is a
joint brokerage account?

A joint
brokerage account is an investment account owned by two or more people. It is
frequently used by married couples, siblings or business partners to invest
together, allowing each account holder to contribute funds toward investments
and make trading decisions together.

How do
joint brokerage accounts work?

Each account
holder typically has equal rights to make trades, manage the investments, and
access account information. While you may have a financial advisor to open and
manage the account for you, each account holder retains equal authority.

Types of
joint brokerage accounts

There are
three main types:

Tenancy
in common: Each
account holder owns a certain percentage of the account, but has full access to
the entire account. Your ownership percentage determines how the account is
divided for tax purposes and can be passed on to an heir.

Joint
tenancy with rights of survivorship: Each account holder has equal share in the account. If
one account holder dies, ownership passes to the surviving account holders.

Tenancy
by the entirety: This
type of account is available to married couples. Ownership automatically passes
to the surviving spouse if one spouse passes away. This type of account may
provide certain legal protections like protection from creditors or lawsuits,
depending on your state’s laws.

Are joint
brokerage accounts subject to probate?

This depends
on the type of account. With tenancy in common, because each account holder can
pass their ownership percentage on to an heir, when they die their percentage
is handled as part of their estate and subject to the probate process. In
contrast, with joint tenancy with rights of survivorship, ownership passes to
the surviving owner in the event the other account holder dies, bypassing
probate. Married couples or business partners often chose this type of account
for this reason. Similarly, with tenancy by the entirety, because it is a type
of joint ownership that includes right of survivorship for the surviving
spouse, it would not be subject to probate.

Pros and
cons of joint brokerage accounts

Some
advantages of joint brokerage accounts include:

Greater
investment power: Because
you’re able to pool your resources with your fellow account holder(s), this may
have the benefit of a more diversified portfolio with potentially higher
returns.

Streamlined
record-keeping: These
accounts provide one consolidated statement covering all trades and income
earned from the account, making it easier to track activity. However, if
multiple people share tax responsibility, dividing income and gains for tax
reporting can be more complex.

Collaborative
control: With a
joint brokerage account, each account holder has equal rights and
responsibilities, allowing you to participate equally in decision-making and
oversight.

Some
potential drawbacks are:

Possibility
for tension: It
may cause conflict if you and the other account holder(s) have different
investment goals or risk tolerances.

Personal
financial risks: You
can be subject to liabilities from things like securities trading or account
fraud if your fellow account holder makes such transactions. Working with an
advisor can reduce this risk, but it’s still worth considering.

Unrestricted
access: Each
account holder has access to the entire account, creating the risk that either
account holder could fully deplete the account, either purposefully or
accidentally, without needing the other’s permission.

It is
important for all account holders to prioritize communication and agree on
investment goals and risk tolerance, so you can help to avoid conflict and work
together as a team.

Pendle Hill
Advisors is proud to contribute to the Montgomery County News with our weekly
curated financial news and topics. If you have any questions about the markets,
your financial plan, or anything, please feel free to reach out to our office
for a no cost initial consultation.

Kent Pendleton, AAMS®

Financial Advisor, RJFS

Pendle Hill Advisors LLC

14375 Liberty St, Ste 109 | Montgomery,
TX 77356

T 936-297-8267

Kent.Pendleton@raymondjames.com | www.raymondjames.com/pendlehilladvisors

Material
created by Raymond James for use by its advisors. Securities offered
through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment
advisory services are offered through Raymond James Financial Services
Advisors, Inc. Pendle Hill Advisors is not registered broker dealers and is
independent of Raymond James Financial Services.