How To Title Your Assets Properly

When purchasing an asset, such as real estate, buyers may not necessarily consider the asset’s title, which stipulates who the legal property owner is; in addition to being vital to current buyers, this information is greatly important for future purchasers. Titling a property correctly can help avoid legal complications, and the most ideal title option for an asset purchaser to choose largely depends on their circumstances, such as the reasons for the purchase, their family’s needs, and how the property owner wishes to distribute the asset upon their death. Learn how to effectively title an asset, and find out how a knowledgeable Boca Raton estate planning attorney can aid people with their estate planning concerns; schedule a consultation with Loughlin Law, P.A. today by calling (561) 677-8384.

What Is the Title of Assets?

The title of an asset is an equitable and legal construct specifying who owns it, which can be one or more parties, providing them with the ability to use the asset however they wish in accordance with the terms of the title and ownership limitations. Title differs from the concept of possession, which may accompany but not prove ownership (for instance, in the case of squatting). Both personal property (typically movable objects, such as artwork, antiques, and vehicles), as well as real property (real estate) have title.

Synonymous with title, according to the Lee County Clerk of Court, a deed refers to a written document that transfers the property title to another party. This document records which party has the title to an asset, as well as the transfer of title between parties.

What Are the Different Types of Property Titles?

Choosing an appropriate title for an asset depends on what the buyer wants to use the asset for, how they want to distribute the asset after their death, and the reason for acquiring the property. The different types of property titles include the following.

Joint Tenancy

Commonly used by married couples and family members wishing to make a combined asset purchase, a joint tenancy provides all owners with equal rights of ownership that automatically transfer to surviving owners when one owner passes away. Worth noting is that an unequal division of ownership rights is not possible with this method, and marriage is also not a prerequisite.

Sole Ownership

In sole ownership, an individual owns the property outright. Importantly, a married person may hold this title in addition to a single person, which means their spouse has no ownership rights. When the owner dies, the asset transfers to the decedent’s heirs outlined in their will (defined by the National Council on Aging as a legal instrument explaining how to handle an individual’s estate following their death); if they have no will, the probate process determines who receives the title.

Tenancy in Common

A tenancy in common permits property owners to split ownership rights of an asset in unequal amounts among several individuals. When opting for this route, be sure to document any agreements related to tax benefits and bills; the IRS does not keep this information or determine who receives tax write-offs. After a tenant in common passes away, their ownership rights do not transfer automatically to the other tenants in common, making it vital to establish a will when using this method; instead, ownership transfers to the decedent’s heirs, or when the decedent leaves no will, a court determines who receives ownership during probate.

Tenants by Entirety

Only legally married couples may title their property in this manner. This method assumes the couple is one individual, conveying ownership to the couple as a single person; the title automatically transfers to the other spouse after one of them dies, without the need for probate, a will, or legal action, although subdividing the property is not possible. If the couple obtains a divorce, the title automatically changes to a tenancy in common.

Understand how to effectively title assets in greater detail, and learn how a seasoned Florida estate planning attorney can help individuals create legally sound estate plans. Contact Loughlin Law, P.A. today to book a confidential consultation.

Why Is It Important To Title Assets Properly?

How a person titles their property can have various legal consequences in terms of asset distribution upon the owner’s death, who obtains tax benefits when one of several owners passes away, how the owner can sell the asset, and how debt collectors can take the property. For instance, if someone has sole ownership of a home but lives there with a partner and the property owner dies, the estate’s executor could sell the asset without obtaining permission from the partner, whereas if both parties jointly hold the property’s title, survivorship rights mean the partner obtains full ownership and can keep living there upon the asset owner’s death.

For those in significant debt, collectors may attempt to force the sale of their property to recover these funds; if a couple owns a home with the title of tenants by entirety, debt collectors would be unable to do this, provided one party does not also have a similar level of debt. Some of the reasons why choosing an appropriate asset title is important are as follows:

• An asset’s title guides heirs on the proportion of the sale proceeds of the asset they can expect after the property owner’s death, with additional guidance outlined in a will or trust.
• The property’s title guides surviving parties about what happens to the asset if one or more owners pass away, such as the transfer of ownership rights or the sale of the asset.
• Some titles mean the division of an asset upon an owner’s death can be uneven, potentially leading to litigation arising from disgruntled parties.
• A property’s title may help avoid probate, the legal process whereby a court determines asset division when someone dies, if the title grants the decedent’s heirs with survivorship rights.

Establishing and Changing the Title of Assets

Commonly, individuals may seek title insurance after acquiring a new significant asset, such as a home, which safeguards their investment in the event of future legal challenges concerning property ownership. This type of insurance also helps prevent title fraud, which involves a fraudulent party tricking a person into transferring the title of an asset into their name.

Title insurers typically provide evidence of asset ownership via written reports outlining the title’s history, produced by analyzing publicly available deeds, which also outline any burdens on the asset, such as covenants (binding agreements between parties), liens (rights to maintain possession of property belonging to somebody else until the owner clears their outstanding debt), and easements (rights to use land for a specific purpose). These companies also use insurance premiums to fund title searches of public records, enabling them to assure customers that they have the title of the asset, and reimbursing them in the event of a title dispute (lenders also receive compensation in this event, which is why they typically require borrowers to obtain this insurance beforehand). If someone wishes to add another individual to the title of their home, without including them on the mortgage, they can do so via a quitclaim deed, which they can also use to add a spouse to the title after getting married or make other changes to the title following a significant life event.

Speak to a Florida Estate Planning Attorney To Understand More About Your Legal Rights

Purchasers of assets may want to carefully consider how to title their property, as the type of title chosen can have profound legal implications. Alongside outlining the owner of the asset, the title also indicates what happens to the property in the event of financial difficulties or death, so the recommended approach is to understand each type of title thoroughly to choose one that aligns with their circumstances and family’s interests. To continue the discussion of the proper ways in which to title assets, and to gain assistance with any estate planning queries, consider speaking to an experienced Florida estate planning lawyer from Loughlin Law, P.A.; call our firm today at (561) 677-8384 to arrange a consultation.