A tenants in common account, usually called a TIC account, is a brokerage or bank account owned by two or more people who each hold a separate, defined percentage of the assets rather than owning everything together. The percentages don’t have to be equal, and when one co-owner dies, that person’s share passes through their estate to their heirs instead of transferring automatically to the other owners. That single feature is what sets a TIC account apart from the more familiar joint account, and it’s why business partners, unmarried couples, and family members who invest together often prefer this structure.
How Ownership Is Divided
Each co-owner holds a specific percentage of the total assets, documented by the financial institution when the account is opened. One person might own 70% while two others hold 15% each. That record controls how income is allocated for tax purposes, how a share is inherited, and what a creditor can reach.
Each fractional interest is legally independent. A co-owner can sell or transfer their share without the others’ consent, and one owner’s actions don’t absorb or dilute another owner’s portion. If two siblings share a TIC account and one makes a bad trade, the loss comes out of that sibling’s share. Getting the percentages right at the outset matters far more than people expect.
In most states, tenancy in common is the default form of shared ownership when the account agreement doesn’t specify survivorship rights. If you opened an account with someone and the paperwork never explicitly created a joint tenancy with right of survivorship, you may already be in a TIC arrangement without realizing it. Worth checking the title on anything you share.
TIC Account vs. Joint Tenancy With Right of Survivorship
The decision most people face isn’t whether to open a TIC account in the abstract; it’s whether to use a TIC structure or a joint tenancy with right of survivorship (JTWROS). The two look similar on a signature card and behave very differently.
- Ownership shares. JTWROS requires equal shares. A TIC account allows any split the owners agree to, so percentages can mirror contributions.
- Death of an owner. In a JTWROS account, the deceased owner’s share transfers automatically to the surviving co-owners and skips probate. In a TIC account, the deceased owner’s share goes to whoever is named in their will, or to their heirs under state intestacy law if there’s no will.
- Estate tax. For JTWROS accounts between non-spouses, the IRS generally includes the full account value in the first owner’s gross estate unless the survivors can prove they contributed their own funds. For a TIC account, only the deceased owner’s actual fractional share is included in their estate.1Office of the Law Revision Counsel. 26 U.S. Code 2040 – Joint Interests
- Transferability. A TIC owner can sell their share independently. A JTWROS owner who transfers their share to a third party typically destroys the joint tenancy and converts it into a tenancy in common anyway.
The choice usually comes down to where you want your share to go when you die. Spouses and close partners who want the account to pass seamlessly to the other owner tend to prefer JTWROS. Business partners and co-investors who want their share to go to their own families usually pick TIC.
What Happens When a Co-Owner Dies
A TIC account has no right of survivorship. When a co-owner dies, their percentage becomes part of their estate and follows the instructions in their will. Without a will, state intestacy law decides, generally prioritizing a surviving spouse, then children, then other close relatives. This is often the whole point of using a TIC account: a business partner’s share goes to their family rather than to the other partners, and one owner’s death doesn’t enrich the survivors at the expense of the deceased person’s heirs.
The practical consequence is probate. The deceased owner’s share almost always passes through a court-supervised process where a judge validates the will, debts are paid, and the executor is authorized to distribute what’s left. Probate commonly takes months. During that time, the surviving co-owners keep full access to their own portions but generally can’t touch the deceased owner’s share until the executor has the right court orders. Probate costs, including attorney and filing fees, commonly run 3% to 7% of the estate’s value.
Using a TOD Designation to Skip Probate
A transfer-on-death (TOD) registration is the simplest way to keep a TIC interest out of probate. Most brokerage firms let each co-owner name a TOD beneficiary for their individual share. When that owner dies, their percentage transfers directly to the named beneficiary with no court involvement. The surviving co-owners keep their shares and the new beneficiary steps into the deceased owner’s role. Ask your brokerage whether they support TOD registrations on TIC accounts and complete the paperwork while you can.
Step-Up in Cost Basis
The deceased owner’s fractional share receives a step-up in cost basis to fair market value as of the date of death.2Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent If the original owner bought $50,000 of stock that grew to $200,000 by the time they died, the heir’s basis becomes $200,000, and an immediate sale would produce no capital gains tax. Only the deceased owner’s share gets this treatment. The surviving co-owners keep their original cost basis.
Estate Tax
Only the deceased owner’s actual fractional interest is included in their gross estate, which makes valuation straightforward compared with JTWROS. For 2026, the federal estate tax exemption is $15,000,000 per person, so estate tax won’t apply to most TIC account holders.3Internal Revenue Service. What’s New — Estate and Gift Tax
Taxes While the Account Is Open
The ongoing tax headache with a TIC account is the Form 1099. Financial institutions issue 1099s under only one owner’s Social Security number, reporting the full amount of dividends on Form 1099-DIV and the full amount of interest on Form 1099-INT, even though multiple people own the account.4Internal Revenue Service. About Form 1099-DIV, Dividends and Distributions5Internal Revenue Service. About Form 1099-INT, Interest Income
The owner whose SSN appears on the 1099 is treated as a nominee for the other owners’ shares of the income. That person has to file their own 1099s with the IRS to allocate the correct amounts to each co-owner. Skip this step and the IRS assumes all the income is yours. Each co-owner then reports only their percentage on their personal return. Failing to pay the tax that results triggers a monthly penalty plus interest.6Internal Revenue Service. Failure to Pay Penalty
Gift Tax on Unequal Contributions
If you contribute more to the account than your ownership percentage would suggest, the IRS may treat the difference as a gift to your co-owner. Deposit $100,000 into an account where your co-owner holds a 50% interest but contributed nothing, and you’ve effectively given them $50,000.
The 2026 annual gift tax exclusion is $19,000 per recipient.3Internal Revenue Service. What’s New — Estate and Gift Tax Gifts above that threshold require you to file Form 709.7Internal Revenue Service. Instructions for Form 709 Filing the form doesn’t necessarily mean tax is due; it uses up part of your lifetime exemption. But failing to file when required is a compliance problem that can surface years later in an audit. If contributions are uneven, document who put in what, and make sure the ownership percentages reflect those contributions.
Creditor Claims and Bankruptcy
A creditor with a judgment against one co-owner can generally reach only that person’s fractional interest. The other co-owners’ shares stay protected. Collection usually means a court judgment followed by a writ of execution or bank levy directed at the debtor’s share.
In bankruptcy, a Chapter 7 trustee has the duty to collect and liquidate the debtor’s property, including their TIC interest.8Office of the Law Revision Counsel. 11 U.S. Code 704 – Duties of Trustee The trustee can sell the debtor’s share but can’t force the other co-owners to sell theirs. In practice, a buyer of a fractional interest in a financial account will usually want the account liquidated, which creates pressure on the remaining co-owners even though they’re not legally obligated to sell.
Managing the Account
Co-owners generally share authority to execute trades and initiate withdrawals, though the specifics depend on the account agreement. Some firms let any single owner place buy or sell orders; others require all signatures for larger transactions. The arrangement demands trust, because one owner’s impulsive sale affects the whole portfolio even when the loss falls disproportionately on their share.
Most brokerages don’t require a separate co-ownership agreement, but writing one is worth the effort. The agreement should spell out who can authorize trades, how disputes are resolved, whether owners have a right of first refusal when another wants to sell, and what happens if someone wants out. Without it, you’re relying on general legal principles that may not match what you assumed.
If a Co-Owner Becomes Incapacitated
If one co-owner becomes mentally incapacitated and hasn’t signed a durable power of attorney, the others can’t manage that person’s share. A court has to appoint a guardian or conservator, which takes time and money. The surviving co-owners can still manage their own portions, but any decision affecting the incapacitated owner’s share is frozen until the court acts. Every TIC account holder should have a durable power of attorney naming someone who can step in.
Exiting the Arrangement
Any co-owner can sell or transfer their share without the others’ permission, though a co-ownership agreement may give the remaining owners a right of first refusal. Most institutions require all current owners to sign off on any change to the account registration, even if only one owner is leaving. Adding a new co-owner or adjusting percentages works the same way. If owners cannot agree, the last resort is a partition action, which for a financial account effectively means a court-ordered liquidation and distribution by percentage. It’s expensive and adversarial, which is why a written dispute-resolution clause pays for itself.
Opening a TIC Account
Every co-owner provides the same identifying information a financial account normally requires: full legal name, date of birth, residential address, and a taxpayer identification number.9FFIEC BSA/AML Manual. Assessing Compliance with BSA Regulatory Requirements – Customer Identification Program10Internal Revenue Service. U.S. Taxpayer Identification Number Requirement Before signing anything, all parties should agree on the exact ownership percentages, because that number becomes the permanent record for tax reporting and inheritance. If you’re contributing 60% of the money, your percentage should reflect that unless you intend to make a gift of the difference. Most brokerage application forms have a section for defining fractional interests. Once identity verification clears and the account is funded, the co-owners gain access to the account’s trading or cash features.