What is Joint Tenants with Rights of Survivorship (JTWROS)?

B is correct. Joint Tenants with Rights of Survivorship (JTWROS) provides automatic transfer to the surviving owner upon death of either party, avoiding probate. This exactly matches the couple's stated goals. Both parties have equal ownership rights and full survivorship rights.

A is incorrect because Tenants in Common (TIC) does not provide automatic survivorship. In a TIC account, each owner's share passes to their estate or designated beneficiaries through their will, not automatically to the other account owner. This would require probate. C is incorrect because a transfer on death (TOD) beneficiary takes only after every owner has died; a TOD designation is not itself the survivorship arrangement between the spouses, although joint tenants with right of survivorship may add a TOD beneficiary. TOD avoids probate but is a different mechanism. D is incorrect because a power of attorney terminates at death and cannot transfer ownership. The power of attorney would become invalid exactly when needed (at death), and the account would go through probate.

B is correct. In JTWROS accounts, each owner legally owns 100% of the account with full survivorship rights. This is the defining characteristic of joint tenancy. When one owner dies, the surviving owner(s) automatically retain 100% ownership because they already owned the whole account. The deceased owner's "interest" does not pass to their estate; it simply ceases to exist.

A is incorrect because JTWROS ownership is not based on contribution percentages. Unlike Tenants in Common (where ownership can be proportional), JTWROS requires equal ownership rights regardless of who contributed what. C is incorrect because it describes Tenants in Common (TIC), not JTWROS. In TIC, each owner has a divisible percentage that passes to their estate or beneficiaries upon death. D is incorrect because the defining features of JTWROS, an equal, undivided interest in the whole account with right of survivorship, do not depend on a percentage that state law assigns. State law does vary on other points, such as creditor claims and how a joint tenancy is created or ended, but those differences do not turn JTWROS into percentage ownership.

B is correct. For estate tax purposes, when spouses are the only joint tenants, one half of the account value is included in the first spouse's gross estate, or $200,000 in this case. JTWROS avoids probate (the legal process of validating a will and distributing assets), but it does not avoid estate taxes. The IRS includes the deceased owner's share in their gross estate for estate tax calculation.

A is incorrect and reflects a common misconception. JTWROS avoids probate but not estate taxes. The deceased owner's share is included in their taxable estate. The probate process and estate tax calculation are separate: probate determines how assets are distributed, while estate tax applies to the total value of the estate regardless of how it transfers. C is incorrect because only the deceased owner's proportional share (not the full account) is included in their estate. The surviving owner's share was already theirs and is not included in the deceased's estate. D is incorrect because, for spouses who are the only joint tenants, one half is included regardless of who contributed the money. Contribution tracing applies to joint tenants who are not married to each other.

C is correct (the exception). JTWROS accounts do not exclude assets from the deceased owner's taxable estate. The deceased owner's proportional share (one half when the joint tenants are spouses) is included in their gross estate for estate tax purposes. JTWROS provides probate avoidance, not estate tax avoidance. This is the most common misconception about JTWROS accounts.

A is accurate: Automatic survivorship is the defining feature of JTWROS. When one owner dies, the surviving owner(s) automatically become the sole owner(s) without the account going through probate or the deceased owner's will. The transfer is immediate and automatic by operation of law. B is accurate: Either joint tenant can typically enter trades, and who may withdraw or transfer funds, and in whose name a check is paid, is set by the joint account agreement and the firm's procedures rather than by joint ownership itself. D is accurate: JTWROS accounts bypass probate entirely. Because the account is owned jointly with survivorship rights, it does not become part of the deceased owner's probate estate. The surviving owner(s) can immediately access and control the account.

B is correct. Only statements 2 and 4 are accurate.

Statement 1 is false: Joint tenants do not own divisible percentage shares based on what each contributed. Emily and Robert each hold an undivided interest in the whole account, so Emily's larger contribution does not give her a 5/6 ownership share. (Contributions can matter for estate tax purposes between joint owners who are not spouses, but they do not divide the ownership.)

Statement 2 is true: Each joint tenant holds an undivided interest in the whole account rather than a separate slice of it. This is what lets the survivor take the whole account at the first death.

Statement 3 is false: This describes Tenants in Common (TIC), not JTWROS. In JTWROS, the deceased owner's interest does not pass through their will or to their estate. The survivorship feature overrides will provisions. Emily's share would automatically pass to Robert, not to her children, regardless of what her will says.

Statement 4 is true: This is the defining feature of JTWROS. Upon Emily's death, Robert would automatically become the sole owner of the entire $600,000 account through the right of survivorship. The account would not go through probate, and Emily's will would have no effect on the account ownership. The transfer is immediate and automatic.