Accredited Investor Verification for Joint Accounts and Shared Assets

Joint accounts and shared assets are common. But they can make accredited investor verification more complex, not every asset type is straightforward to divide either.

While everything may look simple at first glance, questions may quickly come up:

• Who actually owns the asset?
• Can it be counted more than once?
• Are there shared debts tied to it?

For issuers under Rule 506(c), these details matter. Getting them wrong can lead to compliance issues.

Why Shared Assets Create Risk

When more than one person is tied to an account, mistakes can happen:

• The same asset is counted twice
• Ownership is assumed, not verified
• Liabilities are ignored

These issues can lead to incorrect net worth calculations and inconsistent decisions.

Ownership vs. Access

An investor may have access to an account, but that does not mean they own all of it. This can be a common issue in joint accounts and shared assets. Some common scenarios include joint bank accounts, shared accounts between spouses and family members, or shared properties.

Shared Real Estate

Real estate is often jointly owned, but ownership is not always equal or clearly documented.

For example:

• Spouses may co-own property but own different amounts
• Family members or other investment partners may have ownership in a property
• Ownership may be split through LLCs or trusts

In these cases:

• Confirm ownership percentage through title or legal documents
• Use recent valuations or appraisals to determine value
• Include any related liabilities, such as mortgages

Real estate equity should only be counted based on the investor’s actual ownership percentage and pro rata equity, not the full property value.

How to Handle Joint Assets

1. Confirm Ownership

Check account titles and documents. Focus on legal ownership, not just access.

2. Avoid Double-Counting

If two investors use the same account, it should not be counted twice.

3. Include Liabilities

Shared assets may have shared debt. Both must be included in the calculation.

4. Document Decisions

Document how equity is calculated based on their ownership percentage. 

Household Finances: Beyond Spouses

Spouses can combine finances under SEC rules. But other household setups are less clear.

For example:

• Siblings
• Parents and children
• Multi-generational households

In these cases:

• Ask for stronger documentation to list of the ownership structure and percentage owned
• Avoid assumptions
• Apply the same rules across all investors

Documentation Best Practices

To keep the process smooth:

• Use statements that show account owners
• Ask for agreements if ownership is unclear
• Apply the same rules to every investor
• Match assets with liabilities to account for debt

Conclusion

Joint accounts and shared assets are normal, and including those assets require a few more checks. In short, the process is to confirm ownership and ownership percentage, avoid double-counting assets, and staying consistent.