Estate planning is an important financial responsibility that everyone should consider. One key element of estate planning that many people might not fully understand, though, is the titling of assets. This process is not just about organizing your belongings.
Learning more about the full scope of asset titling can ensure the fulfillment of your wishes regarding your belongings after you are gone.
What is asset titling?
Asset titling is the process of legally documenting who owns specific properties and assets. When you purchase a car, a house or open a bank account, you become the owner of those assets and the corresponding titles. Proper asset titling can help avoid conflicts and confusion among your heirs and beneficiaries when it comes time to distribute those assets after your passing.
What are the types of asset titling?
There are different types of asset titling to consider when building out your estate plan:
- Individual Ownership: When you own an asset in your name alone, it becomes part of your estate after your passing. This means it will go through the usual probate process.
- Joint Ownership: It is possible to title assets jointly with someone else, typically a spouse or family member. Joint ownership often entails the “right of survivorship.” This means that if one owner passes away, the surviving owner automatically inherits the asset.
- Beneficiary Designations: For certain assets like life insurance policies, retirement accounts and payable-on-death bank accounts, you can designate beneficiaries. These assets pass directly to the designated individuals without going through probate.
Each serves a different purpose and can help facilitate different situations regarding the distribution of your assets.
What are the benefits of asset titling?
Titling your assets properly can help your loved ones bypass the probate process, which can be lengthy and costly. Probate is also a public process, meaning that anyone can access information about your estate. Overall, clearly and correctly titling your assets makes it easier for your beneficiaries to have a smooth transition when inheriting and managing your estate.
Surveys show that as many as 67% of Americans have no estate plan, but even those who do might overlook complex issues like titling assets. Knowing how to approach this process will bring you that much closer to having a comprehensive plan.