Estate planning is so much more than simply drafting documents. Documents also have to be coordinated with asset titling. Asset titling simply refers to either the way you own your assets (like your real estate) or the way you choose to designate a beneficiary to receive your assets when you die (such as with a life insurance policy or retirement account). This blog will explore some issues that might come up when asset titling and estate planning intersect and prescribe a way to avoid such problems.
Common Forms of Asset Titling in Georgia
The two most common types of asset titling you will likely be dealing with are:
Ownership and Beneficiary Designation
Ownership is fairly straightforward: assets are either owned by one individual (called sole ownership) or are owned by more than one individual (called joint ownership). There are two different types of joint ownership recognized in Georgia:
Joint ownership with a right of survivorship: This form of title means that more than one individual is able to hold ownership of a single asset. The right of survivorship means that when one owner passes away, the other owner on the title assumes full ownership.
Joint ownership: With this type of ownership, joint owners both have an interest in the asset. However, there is no right of survivorship, which means that ownership of the property or asset in question is subject to probate when the first joint owner passes away. The surviving owner still has an interest in the asset, but the danger of this is that strangers may end up co-owning an asset.
What’s the Best Type of Ownership?
In my opinion, sole ownership is the best option for owning assets during your lifetime. During your lifetime, if you don’t own your assets in your name alone, then you lose control over your assets. However, sole ownership is not the best way to own assets when you die, because your family will have to go through probate – regardless of whether you have a Will or not.
Joint ownership of assets is very common, especially with married couples. Joint ownership with our children or family is also a very commonly recommended way to own assets as we get older. Contrary to popular belief, however, joint ownership of assets, especially with our children is not the best way to protect your assets as you age. Tax issues can arise when your assets are not put in the right estate-planning documents or titled correctly. Additionally, it could make your assets vulnerable to creditors if you put them in a relative’s name and they end up getting a divorce or declaring bankruptcy or other legal issues
Revocable Living Trust
One estate-planning document, however, allows to keep assets in your name during your lifetime (like sole ownership) but avoids probate when you die – a revocable living trust (RLT). A RLT is an excellent estate planning tool because it is both a legal document where you state what you want to happen to your assets when you die and what your wishes are if you become incapacitated while living. But, a RLT also allows you to keep ownership of your assets while you are living.
A RLT also allows your family to avoid probate court altogether when you die.
A revocable living trust allows you to title assets in coordination with the wishes that you have stated in your legal document.
Thus, you know exactly what is going to happen when something happens and because it’s revocable you are still able to have control over your assets .
As important as it is to have estate-planning documents that express your wishes, it is also crucial that you actually title assets in coordination with your legal document. A Revocable Living Trust is the only estate planning document that does both. For effective estate-planning solutions that take everything into account, get in touch with our firm here or by calling us at 866-253-6994.