Titling of Property

How a person titles property (such as bank accounts, mutual funds and real estate) may be critical for determining whether such property is vulnerable to his or her creditors. Typically, property can be held in one's individual name, in the name of such person's revocable trust, as a joint tenant with rights of survivorship, as tenants in common or as tenants by the entireties (if held by husband and wife).

It is important to note that how property is titled is not only relevant for creditor exposure but also determines what happens when a person dies and the rights a person has to property owned together with other persons. Our clients are frequently contacting us to ask how newly acquired property should be held to minimize creditor exposure and insure that it is consistent with their estate planning goals.

Consider the differences between joint tenancies and tenancies in common. In the former situation, the surviving joint tenant receives the entire interest in the property upon the death of the co-tenant. With tenants in common, upon the death of a co-tenant the interest of the deceased co-tenant passes to his heirs not to the surviving co-tenant. Bank accounts have their own set of rules. Also, joint tenancies between husbands and wives are treated quite differently from joint tenancies between unmarried persons. From an asset protection standpoint neither joint tenancies nor tenancies in common are particularly effective. The rules are complex and one should seek the services of an experienced asset protection planner before making a decision on how to title property.

Some people are under the misconception that holding property in their standard revocable trust provides creditor protection. This is not true and no creditor protection is achieved by placing property in one's revocable trust. Notwithstanding, it may be beneficial to hold title in your trust for probate avoidance and for other reasons. Thus it is essential that both your asset protection and estate planning needs are taken into consideration as you strategize a plan to preserve wealth for you and your heirs.

Please contact Weisman, Young & Ruemenapp, P.C. at 248.258.2700 for any assistance you may need with regard to the titling of your property as part of a comprehensive estate and asset protection plan.