Why Titling Assets Is the Key to Effective Estate Planning

Putting together an effective estate plan takes a considerable amount of time and effort, but the mistake many people make after taking this step is not understanding how to keep this structure relevant and effective as circumstances change over time. Without this oversight, the intent and purpose of an estate plan can be rendered moot, leaving a family with the complication of probate, and potentially the rules of intestacy, if an estate plan fails completely. One crucial aspect of keeping an estate plan effective is making sure assets are appropriately titled, a responsibility that lasts beyond the time the estate plan was created. Many depend on financial advisors to keep an estate plan up to date, but this approach often leads to mistakes and assets improperly handled. An estate planning attorney is best equipped to answer these complicated questions because they thoroughly understand how the legal ownership of an asset generally drives its treatment before and after death, and are prepared to help individuals classify assets properly so they meet estate planning goals.

Sole Ownership

Sole ownership, meaning one individual has complete control and rights over an asset, is the simplest form of legal property rights. He/she can transfer, lease, sell, or otherwise dispose of the asset without the involvement of other parties. For estate planning purposes, though, this type of ownership is rarely advantageous. Individual ownership leaves an asset open to creditor claims, both before and after death, and will have to go through the probate process before it can be distributed to heirs. Thus, sole ownership does not take advantage of other legal options to protect property from third party claims, nor make it easier for family members to deal with the asset as part of a deceased individual’s estate.

Joint or Multiple Party Ownership

Joint or multiple party ownership (spouses, partnerships, joint ventures, etc.) is a common and popular option among married couples, family members, and those with business assets. These assets typically transfer ownership directly to the other owners upon the death of any one without the need for court involvement, including probate. However, in Florida, individuals frequently include a right of survivorship provision in the deed language, which gives the other owner full rights to the property upon death. This provision must be intentionally included and worded in a particular manner to be effective, but the potential for complicated problems emerge when one owner has outstanding debts, as creditors can sue and seek an interest in the property. Consequently, while this form of ownership may avoid probate, it does not address asset protection very well, a central part of many estate plans.

Business Ownership

Business or corporate ownership is an option individuals choose to create a shield against liability, and limited liability companies are the method preferred by most because of the lower cost of transferring ownership, compared to corporations, and less oversight and regulation. Note, though, that the set up and disposition of business ownership is more complicated than the types of ownership mentioned previously, and will add costs to ensure it is done properly.

Trusts

Finally, most people are familiar with using trusts to manage property for present financial needs and post-death estate planning. Trusts take the property out of the probate process because it is no longer owned by a person, but is held by a trustee for the benefit of named beneficiaries. Depending on one’s goals a revocable or irrevocable trust may be best, and working with an estate planning attorney is key to ensuring assets are titled in line with an individual’s needs and intent.

Talk to an Estate Planning Attorney

Taking care of your loved ones and creating a layer of effective financial security is a process that will differ for every person’s individual circumstances. If you want to know that your legacy will be created and implemented as you envision, speak with Clearwater estate planning attorney William Rambaum about your situation. With proper planning, your assets can help your family for generations to come. Contact the Oldsmar estate planning firm at (727) 781-5357 to schedule an appointment.

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