Nonqualified Accounts Flashcards
What are nonqualified accounts
non retirement but can be tax differed
What happens when a indivi acc dies
dist through owners estate unless stated otherwise
Joint accs are what
2 or more
what are the rules for transacting bus in a joint account
anyone can
2 types of joint accs
tenants in common and Joint tenants with right of survivorship
What is TIC
owns accc equally or specified %
transfers to estate not other tenants
What is JTWROS
undivided interest
passes to other tenants on death
What can be added to an acc to bypass estate on death
TOD
transfer on death
When does a TOD work on a joint acc like TIC and JTWROS
last surviving tenant dies
POAs end when
on death or incapicity of any party
people with a POA power are
fiduciaries
How can you continue a POA after incapacity
durable
What does a resolution for corporate accs need
legal right to open account
any limitations set
name of person who represents the bus in trans
What do corps need to open an account
copy of charter
a new account form
resolution from the BOD
assets that are held in trust
belong to the trust
three roles in a trust
grantor/settler
trustee
bene
living trusts are
during grantors lifetime
whats common fo rrevocable living trusts
grantor to be all three roles
can a grantor also be the other roles
yes
irrevocable trusts can sell assets to pay estate taxes if
grantor is also the other roles
a trust can use margin if
specified not on default
What are custodial accounts
set up for minors that hold secs or cash
what are cust accs usu not used fo r
child raising expenses
rules for cust accs
only one cust and minor
parents cant control it if not the cust
cash only (meaning no debt, lev, etc)
Are proof of cust rights needed to open cust account
no
tax consids for cust accs
taxes are to the minor but the parents are resp to pay
Even though proof of rights to be a cust are not need to open a cust acc, the custs are still what
fiduciaries
Cust of cust accs can do what even though they are the fiduciary
delegate investment authority to a third party
Rules for the cust of a cust acc
need to reinvest proceeds
highly risky/ futures/derivitives not allowed excpt covered calls
cant be compensated if the donor
If minor dies in cust acc where assets go
minor estate not cust or parents estate
if cust of cust acc dies or resigns?
court or donor of the secs in the acc must pick new cust
main diff of UTMA and UGMA cust accounts
UTMA allows RE and lasts until age 25
UGMAs last until majority
What are the two types of cust accs
UTMA and UGMA
What are Coverdell Educaiton Savings accs
known as education IRAs
used for saving for education purposes
last until 30
What happens to Coverdells at 30
liquidated w/ 10% pen and normal tax rate
or rolled to other bene
How do contribs work for Coverdells
2k per year per student until 18
after tax, no tax on gains if used for education purposes
People that have a fiduciary responsibility
trustees
guardians
custs of a minor
Rules for RRs on fid accs
no speculative trans
margin reqs additional auth
cant share in acc profits but can charge reasonable fee
What do RRs use when picking secs for a fid acc
states list of approved secs
Do you need a right to be a fid?
yes except with a custodial acc
