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Series 7 practice questionmediumFiduciary Accounts — Characteristics

Which of the following is an example of a fiduciary account?

  1. AAn individual cash account opened by a retail customer
  2. BA margin account opened for day trading
  3. CAn account managed by a guardian appointed by the court for an incapacitated adult✓ Correct answer
  4. DA joint account opened by two business partners
Explanation

Why C — An account managed by a guardian appointed by the court for an incapacitated adult

A fiduciary account is one in which a person or institution has the legal authority to manage assets on behalf of another party. Examples include accounts managed by guardians for incapacitated adults, custodians for minors (UGMA/UTMA), trustees for trust beneficiaries, and executors for estate beneficiaries. The fiduciary has a legal duty to act in the best interest of the beneficiary.

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