Series 65: Individual Account Features

Individual Account Features

Individual accounts are owned by only one person at a time and are considered an extension of the individual who owns it. This means that everything, from ownership rights in the event of death to the tax treatment of the account, carries the same characteristics as the owner. Most importantly, though, it means instructions regarding the account (trading decisions, transfers or disbursements of funds, etc.) can only be initiated by the individual or individuals whose names are on the account or by parties to whom they delegate that responsibility.

Here are some of the most important features of individual accounts:

• • Taxation. Income and profits incurred in an individual account are generally reported on the tax return of the individual or individuals who own the account.
• • Transfer of ownership. An individual can generally transfer ownership as she desires (on non-retirement accounts). In the event of the death of the owner, the account’s assets are transferred to the account owner’s heirs as required by law or by the account owner’s instructions.
• • Beneficiary designation. When a person opens an account, she must name a beneficiary. This will be the person who will receive the account assets if she dies, despite what is said in the will. So it is important to make sure that beneficiary designations are kept up to date, especially when a big life change occ