Account Types and What Distinguishes Them

Scope. MarketClue does not recommend any account type to anyone. This article explains the two axes accounts vary along, and the mechanical consequences that follow from each — tax treatment is described only as mechanism and direction, with all specifics parked to Annex A, as throughout this portal. Account structures are legal arrangements and this is not legal advice. United States primary, verified 16 August 2026; other jurisdictions have comparable categories under different names.

Who owns the account is a legal question. How it is taxed is a fiscal one. A single account has an answer to both, and changing one does not change the other.

The ownership axis

Individual. One owner, whose estate the assets form part of on death.

Joint. Two or more owners — and the form matters enormously. Under a right of survivorship, the surviving owner takes the whole automatically on death. Under a tenancy in common, each owner has a defined share that passes under their own estate arrangements instead. The two look identical on a statement and behave completely differently at the moment they matter.

Custodial, for a minor. An adult controls the account and the assets belong to the minor irrevocably from the moment they are contributed. Control transfers to the beneficiary at the age of majority defined by the applicable jurisdiction, and cannot be revoked because circumstances changed. That irrevocability is the feature most often misunderstood.

Trust. Held by trustees under a trust instrument, with the terms of that instrument governing rather than the account paperwork.

Entity. Held by a company, partnership or other organisation, with authority determined by its constitutional documents.

The single most consequential mechanical fact in this article, and it is not about tax. A beneficiary designation on an account — a transfer-on-death or payable-on-death instruction — generally governs what happens to that account, and generally overrides what a will says. A will directs the estate; a designated account may pass outside it entirely. So a carefully drafted will can be silently contradicted by a form completed years earlier and never revisited, and this happens routinely rather than exceptionally. MarketClue is not a law firm and this is not legal advice — the point here is simply that the designation is a live legal instrument rather than an administrative preference, and that people frequently do not know it exists on their accounts.

The tax axis, described as mechanism only

Tax-advantaged accounts exist in most jurisdictions under different names, and the mechanism is common even where the details are not.

There are three points at which tax can apply — when money goes in, while it grows, and when it comes out. An ordinary taxable account is exposed at all three in some form. A tax-advantaged account removes or defers exposure at one or more of them.

The direction of the difference is therefore about timing rather than existence: most such accounts change when tax applies rather than whether it applies at all, with the two broad families differing in whether relief comes at contribution or at withdrawal.

Where this axis meets the previous articles

Any of these accounts can generally be operated as a cash account or a margin account, with the consequences set out in Cash Accounts and Margin Accounts — though some account types restrict or prohibit margin entirely, which is a feature of the account type rather than of the firm.

And the protection schemes described in the previous article apply per separate capacity, so accounts of different ownership types at the same firm are generally treated as distinct for coverage purposes.