General
An asset is generally transferred by four methods: according to your Will, by beneficiary designation, or based on an agreement or state law. The title of an asset is as of upmost importance in determining who will inherit that asset as the terms of your Will or other estate planning documents. If asset titling has not been coordinated with your estate planning documents, the terms of your estate plan may never be realized. You should work with your professional advisors to coordinate asset ownership with your estate plan, ensure assets will transfer to beneficiaries according to your wishes, and that any tax planning becomes effective at your death.
Common Types of Asset Titling
| Title | Definition |
| Sole Ownership | An individual owner has a complete title to the property. |
| Joint Tenancy With Right of Survivorship | Two or more people equally own assets, each having rights of survivorship. |
| Tenancy by the Entirety | A form of joint ownership is only available between spouses. |
| Tenancy in Common | Two or more owners; may have equal or unequal fractional ownership. |
| Community Property | Community property states include Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Also, Puerto Rico recognizes community property. Income earned, and assets acquired after marriage are community assets, and each spouse owns 50%. |
| Revocable Trust | Assets owned by a trust pass per the terms of the trust, and bypass probate. This is very helpful when assets, such as real property are owned in multiple states. |
Additional Titling Holding Categories
- Severalty: Ownership held by one person only. This can be a natural person or a legal person, such as a corporation.
- Tenancy-in-Partnership: Method by which a partnership owns the property. Specific interest in the property can not be conveyed by one partner alone.
- Custodian for a minor: Under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act, an adult person can hold title to the property for the benefit of a minor.
- Trustee: The trustee of a living or testamentary trust holds legal title to the property for beneficiaries, who have equitable title.
- Life estate: Use of ownership in real property that terminates upon the death of the life tenant.
Types of account beneficiary designations
Beneficiary Designation
Certain property will pass upon your death by way of a beneficiary designation. These forms are often provided as part of a contract issued by the plan provider for life insurance, annuities, and retirement plan assets (e.g., IRA, 401(k), 403(b), 457(b), pension and profit-sharing plans).
If you do not complete a beneficiary designation form, typically the plan will have a default beneficiary, which is usually your probate estate. There may be income tax considerations when naming beneficiaries of retirement plan assets.
Transfer-on-Death/Payable-on-Death (TOD/POD)
Some states permit bank or other investment accounts to be held with a “transfer-on-death” (TOD) or “pay-on-death” (POD) designation. When an account has a TOD or POD designation, it will automatically pass to the named beneficiary at the property owner’s death.
For example, a checking account might be titled “Jane Miller POD Gary Miller.” At Jane’s death, the checking account will automatically pass to Gary automatically without going through probate.
Beneficiary Deeds
Some states recognize beneficiary deeds (also called transfer-on-death deeds). A beneficiary deed is filed with a deed to real estate and identifies the person(s) who are to receive real estate following the property owner’s death. The designation is typically revocable during the owner’s lifetime. If the beneficiary deed is still in place at the owner’s death, the property passes to the designated beneficiary bypassing probate. The property is still included in your gross estate for estate tax purposes.
Conclusion
Asset titling is one of the most critical and often overlooked aspects of estate planning. How an asset is titled determines how it can be disposed of during your lifetime and, most importantly, who receives it upon your death.