UNIT 03.01-001 Flashcards
A client and his spouse own shares in the ACE Fund as tenants in common. If each has a 50% ownership interest in the account and the client dies, what happens to the shares in the account?
Fifty percent of the shares would belong to his ______ and the remaining half would be distributed to his ______.
Fifty percent of the shares would belong to his spouse and the remaining half would be distributed to his estate.
In a TIC account, securities pass to the deceased owner’s estate.
When a member firm opens an account for a registered representative of ANOTHER MEMBER, the EMPLOYER-MEMBER must provide written authorization _____ opening the account.
before opening the account.
When a registered representative of a member firm opens a brokerage account with another member firm, the representative’s firm must provide written authorization.
For which of the following pairs of customers could a registered representative open a joint account?
A father and his 13-year-old son
Two competent adults
Mother and her 23-year-old daughter
An aunt and her minor nephew
Two competent adults
Mother and her 23-year-old daughter
An account owner is the person who controls investments within an account and requests distributions of cash or securities from the account. A joint account may be opened only by account owners who can legally exercise such control over the account. Minors may not exercise control over an account.
Cam and Casey own C&Cs Flowers, a small, unincorporated florist. They are looking to open an account to invest for the business. What sort of account should Cam and Casey open?
Partnership account
A partnership is the best choice here. Sole proprietor means one person, not two. Joint tenants would not carry the business name, and the business is unincorporated.
One of your clients wants to set aside some money for her ne’er-do-well nephew, who just turned 30. She does not wish his numerous creditors to have access to the money until after she dies, but she wants him to have easy access to the money at that time. You recommend that she open
a TOD registration on an account in her name.
TOD stands for transfer on death. It is used to facilitate transfer of assets in an account upon the death of the account holder (your customer in this case) without the need for probate. While the owner is alive, the account remains her property. The nephew is chronologically too old for a custodial account. She should not have a joint account because of creditor and control issues.
To comply with the regulations regarding customer identification programs, the minimum identifying information that must be obtained from each customer before opening an account includes
name.
a taxpayer identification number.
Mere verbal assurance that the customer is of legal age is not sufficient; the actual date of birth must be obtained. A post office box is never acceptable without a physical address. In addition, the identity of the person opening the account must be verified through documentation, such as an unexpired drivers license or passport.
A transfer on death (TOD) designation may be made for all of the following account except
A) individual.
B) joint tenants with rights of survivorship (JTWROS).
C) tenants in the entirety.
D) tenants in common (TIC).
tenants in common (TIC).
The structure of a TIC account requires that the decedent’s interest in the account is distributes through their estate. This prohibits the function of a TOD designation. All of the others here may have a TOD designation. Note that in a joint account the TOD becomes effective after the death of the last tenant.
Which of the following government-issued documents would not be considered acceptable proof of identity?
A current birth certificate issued by Los Angeles County, California
A birth certificate is not an acceptable ID. Also, in order for an ID to be current, it must have an expiration. Birth certificates do not come with expiration dates.
Which of the following concerning Section 529 plans are true?
______ withdrawals are exempt from federal income tax.
______ states will tax the withdrawals as income.
QUALIFIED withdrawals are exempt from FEDERAL income tax.
SOME states will tax the withdrawals as income.
The withdrawals from Section 529 plans are federally tax exempt, but they may be taxed as income in some states.
The money invested in a Section 529 plan is ALWAYS after tax.
The withdrawals MUST be used for qualified education expenses (e.g., tuition, books, lecture fees, lab fees) and not simply for any expense of a student.
This is an example of an SIE question that might appear on the Series 6.
All of the following information would normally be found on a new account application except
education.
Education is not required on a new account form. All of the other selections are normally required information when opening a brokerage account.
