Tenants in Common (TIC)

B is correct. Tenants in Common (TIC) allows each owner's share to pass to their estate and heirs rather than to the surviving co-owner. When Michael dies, his 60% share would pass to his wife and children according to his will or state intestacy laws, not to Jennifer. TIC also accommodates the unequal 60/40 ownership split they desire.

A is incorrect because JTWROS provides automatic right of survivorship, meaning Michael's share would pass directly to Jennifer (the surviving joint tenant) upon his death, bypassing his estate and preventing his wife and children from inheriting his share. Additionally, JTWROS requires equal ownership shares, which conflicts with the desired 60/40 split. C is incorrect because Tenants by the Entirety is available only to married couples, and Michael and Jennifer are business partners, not spouses. D is incorrect because a TOD designation with Jennifer as beneficiary would transfer Michael's share to Jennifer at death, which contradicts his goal of having his share go to his wife and children.

C is correct. Tenants in Common allows owners to hold unequal fractional interests (such as 60/40 or 70/30), and when one owner dies, their share passes to their estate and heirs according to their will or intestacy laws, not to the surviving co-owners.

A is incorrect because TIC specifically allows unequal ownership percentages. JTWROS (Joint Tenants with Right of Survivorship) requires equal shares, but TIC does not. B is incorrect because TIC has NO right of survivorship. The deceased owner's share goes to their estate/heirs, not to surviving co-owners. This is the key distinction between TIC and JTWROS. D is incorrect because TIC does NOT avoid probate. The deceased owner's share must go through probate as part of their estate. TIC is the only joint account type that requires probate (JTWROS and TBE both avoid probate through survivorship rights).

B is correct. In a Tenants in Common account, there is NO right of survivorship. When Alex dies, their 50% share ($250,000) passes to their estate and is distributed according to their will (to their spouse in this case). Alex's spouse would now own 50% of the TIC account alongside Bailey (30%) and Cameron (20%).

A is incorrect because TIC does not provide survivorship rights. Alex's share does NOT automatically transfer to the surviving co-owners (Bailey and Cameron). Instead, it passes through Alex's estate to their designated heirs. C is incorrect for the same reason—there is no proportional redistribution to surviving co-owners in a TIC account. The share passes to the deceased's heirs, not to co-owners. D is incorrect because the death of one TIC owner does not require liquidation of the entire account. The surviving co-owners retain their interests, and the deceased's share passes to their heirs, who become new co-owners in the TIC account.

C is correct (the EXCEPT answer). TIC accounts do NOT avoid probate. When a TIC owner dies, their fractional share must pass through probate as part of their estate before transferring to heirs. TIC is the only joint account type that requires probate (JTWROS and TBE both avoid probate through automatic survivorship rights).

A is accurate: Each TIC owner holds an undivided interest, meaning they own a percentage of every asset in the account rather than specific individual securities. For example, in a 60/40 TIC, one owner has 60% of each stock position and the other has 40% of each position. B is accurate: Unlike JTWROS which requires equal shares, TIC allows unequal ownership percentages such as 60/40, 70/30, or any other split the owners agree upon. This flexibility makes TIC attractive for business partners or family members contributing different amounts. D is accurate: In TIC accounts, either party has trade authorization and can initiate transactions. However, disbursements (withdrawals) must be payable to all owners jointly.

C is correct. Statements 1, 3, and 4 accurately describe TIC features that align with the siblings' goals.

Statement 1 is TRUE: TIC allows unequal ownership percentages. The siblings can establish a 60/40 ownership split reflecting their $600,000 and $400,000 contributions. JTWROS requires equal shares, but TIC accommodates any agreed-upon split.

Statement 2 is FALSE: TIC does NOT provide automatic right of survivorship. This is the key feature that distinguishes TIC from JTWROS. In TIC, when one owner dies, their share does NOT automatically transfer to the surviving co-owner. Instead, it passes to the deceased owner's estate and heirs. This FALSE statement makes TIC appropriate for the siblings' goal of having shares pass to their own children.

Statement 3 is TRUE: TIC requires probate when one owner dies. The deceased owner's fractional share must go through the probate process as part of their estate before transferring to heirs. TIC is the only joint account type that requires probate (JTWROS and TBE avoid probate).

Statement 4 is TRUE: Each TIC owner's share passes to their own estate and heirs according to their will or state intestacy laws. This ensures the siblings' shares will go to their respective children rather than to each other, meeting their stated estate planning objective.