Why Asset Titling Is Important
Asset titling is of the utmost importance for you and your family – but you might be asking why. Can you answer “yes” to either of the following questions?
- Do you have your children listed on any of your accounts as a joint owner alongside you?
- Do your parents or other individuals have you listed on some of their accounts as a joint owner? (This may have been done so you are able to sign any checks or documents for them as necessary.)
If so, this can potentially expose you and your family to much more liability than you would expect, including unwanted claims by creditors.
Hypothetically, imagine a scenario in which you name your child as a joint owner of one of your checking accounts, investment accounts, piece of real estate, etc.
Following this, an unfortunate and unexpected event occurs. Examples of this might be that your child has a failed business venture, and a creditor is pursuing their assets, or they are involved in an automobile accident in which the other party sues.
In either of these events, it’s possible for your child’s creditors to attempt putting claims on your accounts! No matter the fact that you care about your child’s well-being, this is not an intended or desirable outcome.
Assets or accounts with no named beneficiaries or POA
Another titling issue that commonly occurs: an asset, or account has no named beneficiaries, or no “Power of Attorney” designation. If you become incapacitated and have not authorized anyone else to sign for you in the event it’s needed, your account — in effect — is frozen. Your brokerage firm or bank won’t be able to take instructions from anyone else pertaining to your affairs unless you’ve previously given permission for them to do so.
Another scenario would be if you pass away unexpectedly and have no named beneficiaries designated to inherit your assets. In that case, the assets could then pass through the probate legal process. If you know anything about probate, or at least have heard of the process, you know it can be a lengthy one with a lot of hassle. How to avoid probate? Make sure you have the proper designations in place, or contact a financial advisor to help you through it each step of the way.
How a financial advisor can help with asset titling
Your advisor can identify how your various properties, bank accounts, loans and investment accounts are currently titled, and make any necessary changes. Be certain you have named a trusted person to sign for you in the event you are unable. It’s also key to ensure there are beneficiaries in line to receive these assets, should something unfortunate happen to you.
Getting things lined up and taken care of is the best route for you and your family; remember that while nobody likes the thought of the unexpected, preparing for it is essential.
December 2018Contact Author