FINRA Series 7Opens Accounts and Evaluates Customer ProfileMedium
A married couple residing in a community property state holds a joint brokerage account. Upon the death of one spouse, how is the account typically treated absent a will specifying otherwise?
- AThe account is liquidated immediately and proceeds given to the state
- BEach spouse is deemed to own 50% of the account, and the deceased spouse's half becomes part of their estate
- CThe entire account automatically transfers to the surviving spouse
- DThe surviving spouse forfeits all rights to the account
Show answer & explanationAnswer & explanation
Correct answer: B. Each spouse is deemed to own 50% of the account, and the deceased spouse's half becomes part of their estate
In community property states, marital assets acquired during the marriage are generally considered owned equally (50/50) by each spouse, regardless of whose name or income funded the account. Upon death, the decedent's 50% share passes through their estate, not automatically to the survivor (unless titled as JTWROS).
Why the other options are wrong
- A. There is no automatic liquidation or escheatment upon a spouse's death.
- C. That automatic transfer describes JTWROS, not standard community property treatment.
- D. The surviving spouse retains their own 50% ownership interest.
Community Property
In certain states, assets acquired during marriage are owned equally (50/50) by both spouses, regardless of title or contribution.
- Applies in community property states (e.g., CA, TX, WA)
- Each spouse owns 50% regardless of income source
- Differs from JTWROS, which passes 100% to survivor automatically
Memory trick: Community = split down the middle, 50/50, even after death.