Why is Asset Titling So Important?
Carefully preparing your last will and testament with the advice and help of a Michigan estate planning attorney is a smart move, but by itself, preparing a last will and testament does not necessarily ensure that your directions will be followed as you intended when that time comes.
You’ll have to take one more step and ensure that all of your assets are titled properly. Titling is the legal term that identifies who owns your assets and how those assets are owned. For instance, are you the sole owner of a particular asset, or is the asset jointly owned with another co-owner?
Proper asset titling can help you be certain that your instructions for your assets and properties are adhered to and honored after you’ve passed away. On the other hand, mistakes in asset titling could lead to a number of unintended and unexpected consequences.
What Should You Know About Titling Your Properties and Assets?
The titling or ownership structure of an asset or property affects how that property or asset will be distributed and handled after your death, whether it will have to be probated, and the amount of any estate taxes that may have to be paid.
Your last will and testament determines how some of your properties and assets are distributed after your death, but only if those properties and assets are a part of your probated estate. Such assets may include vehicles, jewelry, real estate, or other personal belongings or items.
However, assets that have designated beneficiaries, such as life insurance policies and brokerage and bank accounts, are not considered a part of your probated estate and are transferred directly to those beneficiaries upon your death and without regard to what may be stated in your will.
What Happens to Assets With Designated Beneficiaries?
Here’s an example: When you open a checking account, you may designate a beneficiary for the account. Upon your death, the remaining funds in the account are automatically transferred to the beneficiary you designated, even if your will says that someone else should receive those funds.
Because you designated a beneficiary for the checking account, the funds in that account are not considered a part of your probated estate, and any part of your will that addresses that account (or any other properties or assets that are not a part of your probated estate) will be disregarded.
Accounts with designated beneficiaries are called “pay-on-death” or “transfer-on-death” accounts.
What Should You Know About Titling Jointly Owned Properties?
When two or more parties jointly own a property in the State of Michigan – for instance, when a married couple owns a residence jointly – there are several ways that the joint ownership of the property may be titled.
Owning a property as “tenants-in-common” lets you jointly manage the property with the other owner or owners, but when an owner dies, that owner’s share of the property does not transfer automatically to the surviving owner or owners.
Instead, the decedent’s share of the property is distributed according to the instructions in the decedent’s will and is considered a part of the decedent’s probated estate, in the same way as any other personal property item or asset.
On the other hand, with a “rights of survivorship” title, the surviving owner automatically owns the entire property after a co-owner’s death, and the property is not subject to the probate process.
What Should You Know About Titling and Revocable Trusts?
If you establish a revocable trust with the advice and help of a Michigan estate planning lawyer, the properties and assets that you transfer into the trust are no longer a part of your probated estate, so your beneficiaries can avoid the time-consuming and costly probate process.
Like your last will and testament, your revocable trust requires one more important estate planning step. You will have to retitle and transfer some or all of your assets to the trust. In some situations, retitling your assets may also help you reduce any estate tax that your estate may owe.
During your lifetime, your revocable trust allows you to operate as your own trustee, and it allows you to transfer assets into and out of the trust merely by retitling those assets. An estate planning lawyer will help you prepare or review your revocable trust and retitle your assets.
In What Other Ways Will Your Estate Planning Lawyer Help You?
Questions about titling your properties and assets may lead to other important questions, such as:
1. If you have established a revocable trust, should a new bank or brokerage account be opened in your name or the name of the trust?
2. If you co-own an account with your parent or child, should it be a pay-on-death or transfer-on-death account?
There are no one-size-fits-all answers to questions like these. You will need the personalized answers that a Michigan estate planning attorney can provide after that attorney reviews your current estate plan and becomes familiar with your personal and financial circumstances.
When Should You Contact an Estate Planning Lawyer?
You may not have the ability to predict the future, but you can be ready for it. If you have not prepared a last will and testament or a revocable trust – and especially if you have a family, a business, or significant assets – now is the time to prepare those documents and plan your estate.
If you already have an estate plan in place, a Michigan estate planning lawyer can conduct a detailed review of your beneficiary designations and asset titling. In particular, you should review your estate plan after any major life change such as a marriage, divorce, or relocation.
Meet the Team at Estate Planning & Elder Law Services
At Estate Planning & Elder Law Services, a practiced estate planning lawyer can help you establish the estate plan that will protect your estate, provide for your loved ones, and express your instructions clearly. If you already have an estate plan in place, we can ensure that your plan is up-to-date and that your properties and assets are titled properly.
In order to serve you effectively, the offices of Estate Planning & Elder Law Services are located throughout Southeast Michigan. Our team of attorneys has been helping our clients plan their estates for over twenty years.
To learn more about the many estate planning services and elder law services we provide, or to begin preparing or reviewing your estate plan, schedule your initial evaluation with us – today – and call Estate Planning & Elder Law Services at 248-997-4394 or toll free at 888-PLAN-050.