Series 7 Exam Question 219: Answer and Explanation

Question: 219

John Dow and Jane Dough, who are engaged but unmarried, want to open a new account registered as joint tenants with rights of survivorship. Which of the following should occur?

• A. A principal of the firm should be notified immediately about the account registration so that a report can be filed with FINRA.
• B. The agent must refuse to open the account.
• C. The agent must notify a principal of the firm and a report must first be filed with the SEC.
• D. The agent may open the account, but should first discuss the rules of a JTWROS account with the unmarried couple.

Correct Answer: D

Explanation:

D. No rules prohibit opening an account registered as joint tenants with rights of survivorship (JTWROS) for two unmarried persons. The registered representative should, however, take all steps to be sure that the unmarried individuals understand the resulting consequences should one party to the account die. For example, in an account registered JTWROS, if one of the engaged parties to the account (for example, John Dow) dies, the deceased party's ownership interest in the account passes to the surviving tenant (Jane Dough) rather than to the deceased party's (John Dow's) estate.