You work hard trying to stay out of debt and accumulating assets. Once you achieve these goals, it’s vitally important to title your holdings correctly. If you don’t, you (and your heirs) take the risk of losing everything you worked so hard to acquire.
If you die and the assets aren’t held correctly, the wrong person could end up enjoying your assets or the courts and lawyers could chew up everything in legal fees. Even if you don’t die, if your assets are titled incorrectly, you might lose your treasure to a lawsuit you have nothing to do with. Ugly.
What Does “Holding Title” to Assets Mean?
How you “hold title” to an asset really just tells the world who owns it. If you hold title to an asset in joint tenancy with another person, it tells the world that you both own that asset. That means, in many cases, if the other person gets sued, the creditor can go after the entire asset – not just one person’s share.
If you hold an asset in your name only, it tells the world that nobody else has any interest in the property. That means even if you want them to manage or have the asset – they don’t have access (unless you name a beneficiary).
How you hold title is crucial. It determines who can and who can’t make decisions about the asset. It determines who can and who can’t sell the asset. And it determines who can be sued and lose the asset too.
How The Title Of Your Assets Is Determined
Whenever you buy something substantial, the seller will ask you how you want “to title” what you bought. Then they’ll register your holdings accordingly.
Look at the ownership documents for your car and house. They tell you who owns those assets. Look at your monthly investment account statements. These papers tell you exactly who owns those accounts.
You may not remember how you titled your assets….but you did – even by default. Nobody else can or could have done this for you.
Are Your Assets Titled Correctly?
The answer to this question depends on what you ultimately want. Are you interested in maintaining full control but allowing someone to manage the asset if you are incapacitated or die? In that case, a trust or having a Power of Attorney and Payable on Death account might be the way to go. Do you own something jointly with another party? Again, a trust or a form of joint tenancy might be your best bet.
The best way to find out if your assets are held correctly is to ask a qualified attorney. The lawyer will have to get to know you a little in order to answer the question. That’s because he or she can only tell you if your assets are held correctly if they first understand your ultimate objectives and what you really want to see happen with your estate.
How To Change The Title To Your Assets
This is the easy part. When you create a trust (for example) you’ll get instructions. For financial assets, just take those instructions down to the asset custodian and they’ll create all the paper work. That includes how the asset needs to be titled and who the beneficiaries should be (if applicable). It’s really simple.
And for real estate, it’s even less work. In most cases, your attorney will re-title the property for you.
Re-titling assets is really simple – but you have to focus on this. This is just as important as any other part of your financial life. Sadly, many people overlook this vital step.
Are your assets held correctly? How do you know?