Retirement & Financial Planning Report

Deciding how to title your assets can be complicated. Nevertheless, you should take the time and effort to make the proper choices. Mistitled assets may pass to the wrong people while tax reduction opportunities might be lost.

Before going into technical details, you should consider your personal circumstances, which can influence how assets are titled. If you’re married, for example, your spouse may prefer that property be held jointly. Satisfying your spouse can outweigh the disadvantages of joint ownership.


To present another scenario, you might have a child who is likely to squander her inheritance. In that case, you might leave assets to a trust in order to provide security for your heir as well as peace of mind for yourself.

Aside from personal priorities, other factors can affect how you’ll title your assets:

* Probate. In some states, probate can be extremely expensive and time-consuming. Fortunately, property that’s jointly held, with right of survivorship, won’t go through probate. The same is true of assets with a named beneficiary, such as an IRA.

Moreover, assets that have been transferred to a trust during the owner’s lifetime will not be subject to probate at the former owner’s death.

* Estate planning. As mentioned, assets going to a joint owner with right of survivorship or to a designated beneficiary won’t go through probate. Such assets will pass directly to the surviving co-owner or to the named beneficiary. This is true regardless of what is included in a will.

Suppose, for example, you name your son Paul as joint owner with right of survivorship of your bank account, so Paul can write checks, if necessary. At your death, all of the money in the account will belong to Paul while your other children will be excluded.

* Incapacity. Some forms of holding title to assets can provide for a smooth transition to another individual’s management of that property. Moving assets from sole to joint ownership is probably the simplest way to provide for possible incapacity. However, joint ownership is inflexible, as explained above, so you may prefer to hold assets in trust so that a successor trustee can step in, if necessary.


* Asset protection. Holding assets jointly with right of survivorship may expose the assets of one owner to the creditors of the co-owner. Conversely, shifting assets to an irrevocable trust may shield those assets from potential creditors. In addition, building wealth inside an employer-sponsored retirement plan or an IRA can offer federal protection from creditors.

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FERS Retirement Guide 2022