Building your estate plan is about more than just having an attorney draw up a few documents. These documents are merely instruments to achieve a larger goal: the most cost-effective, tax-efficient, and expeditious administration of your estate and distribution of your assets.
One of the critical steps that you as an individual can take to facilitate this goal is to collect and organize the various titles to your assets. Your personal representative will need these titles, and if they are not easily accessible, it can significantly delay the administration of your estate.
What Is a Title?
A “title” is the document or instrument you received when you acquired the asset; it proves your ownership of the asset in question. Each asset’s title will have to be transferred so that your heirs or beneficiaries can take legal ownership of the assets you bequeath to them.
The confusing part is that there is no standardized document called a “title.” Different types of assets issue different types of titles. Below is a list of what “title” means for some of the most common assets.
Cash Accounts: Checking, Savings, Certificates of Deposit
A typical checking and savings account through a bank will have a list of primary account holders. Heirs can be made joint owners of an account, but this may not be the best option in your case as it can expose the funds to the heir’s creditors. Alternatively, you can make Pay-on-Death (POD) or Transfer-on-Death (TOD) designations, which allow the account to transfer to named beneficiaries outside of the probate process.
When gathering titling information about your various cash accounts, be sure to include the contact information of the banking institutions and any employee contacts in addition to the account details.
Securities and Stocks
If you own shares in privately-owned companies, you should have been issued a physical stock certificate (for corporations) or membership interest certificate (for LLCs) at the time of your investment.
Publicly traded companies used to issue physical certificates as well, and if you purchased shares in such a company prior to the 1990s, you may have received one. But with the rise of the internet and electronic trading platforms, public companies slowly stopped issuing stock certificates.
Regardless of whether your shares are in public or private companies, collecting any certificates or documents related to your ownership and compiling a ledger of those shares, their value, and the names and addresses of the companies will be a huge help to your personal representative.
Real Estate Holdings
If you own a piece of real estate (as a personal residence or for investment purposes), you should know where the original deed or land contract is. On top of this document, you should have a list and description of all properties, including the name of the owners, mortgage holders, and estimated value.
Qualified retirement plans (e.g. pensions, IRAs, or ESOPs) have beneficiary designations, which means titles don’t need to be transferred manually to your heirs—they will transfer by operation of law to the named beneficiary.
You will want to review the primary, secondary, and tertiary beneficiaries periodically, though, to ensure they are up to date.
Moreover, having a full list of your retirement plans, including plan descriptions, originally signed documents, account statements, and the name of the company or financial institution is a good idea. Your personal representative will not necessarily remember or know every plan you have in place.
Life insurance policies also have beneficiary designations and therefore will transfer by operation of law. However, you will make the job considerably easier for your family if you catalog these plans and store their relevant information in an easily accessible place.
Information to include is the name and address of the insurance company, original policy application, policy value, and beneficiary designations.
Government savings bonds, treasury notes, and treasury bills have become a less-common investment vehicle in recent years. If you purchased such a bond and were issued a paper certificate, store that document in a safe place and be sure to make a list of such bonds, including the type of bond, face value, maturity dates, and owners.
Collectibles and Valuable Personal Property
Certificates of title often accompany purchases of collectibles, paintings, sculptures, fine furniture, classic cars, and the like. These titles prove both your ownership and the authenticity and provenance of the item in question. They should be stored in a safe place, the location of which should be made known to your personal representative.
Make the Process Seamless
If you take the time to catalog your assets (including your digital assets!) and collect the necessary documents and instruments used to prove your ownership of them, i.e. titles, you can reduce the emotional and logistical burden on your personal representative.
Furthermore, the more accessible everything is to your personal representative and heirs, the lower the chance of mistakes and the faster they can distribute your assets as you directed.
It’s also very important to know how your assets are titled as this can affect the efficacy of your estate plan. Getting personalized advice for your situation is the best way to ensure you can achieve your long-term financial goals. To discuss asset titles or other aspects of your estate plan, call me at 561-998-2362 or email me at Paul@PLabinerEsq.com.