Create Multi Generational Wealth By Owning Assets In The Most Efficient Way

Theodora Lee Joseph, CFA

3 mins

Create Multi Generational Wealth By Owning Assets In The Most Efficient Way
  • Titling your assets properly can help you minimize estate taxes, avoid probate, and have more control over your wealth distribution after your death.

  • Owning assets jointly with rights of survivorship or placing them into a trust can help keep them out of the cumbersome probate process.

  • Designated beneficiaries of life insurance policies and financial accounts can also provide much easier access to these assets.

Titling your assets properly can help you minimize estate taxes, avoid probate, and have more control over your wealth distribution after your death.

Owning assets jointly with rights of survivorship or placing them into a trust can help keep them out of the cumbersome probate process.

Designated beneficiaries of life insurance policies and financial accounts can also provide much easier access to these assets.

What asset titling is all about

“Asset titling” involves thinking about the way in which you own things. It’s an essential part of effective multigenerational wealth planning and one which – if possible – you’ll want to get right the first time. Titling your assets properly can help you minimize estate taxes, avoid probate (the legal process of administering your estate), and gain greater control over how your assets are distributed after your death – as well as reduce the risk of unnecessary disputes among the loved ones you leave behind.

Depending on how you title them, ownership of your assets can pass in one of five ways when you die. These include by rights of survivorship with jointly owned property; to named beneficiaries for certain financial and insurance accounts; according to the terms of a trust; according to the terms of a will; and, in the absence of a will’s provisions, in line with local intestacy laws.

How you own your property matters

You may well be the sole and outright owner of many of your assets. But all sorts of property, from real estate to bank accounts, can also be owned jointly – including as “community property” in the case of married couples. If you include a “right of survivorship” in a written legal document, or deed, your spouse will inherit this property if they survive you without it having to go through the probate process.

The less common “joint tenancy by the entirety” works in a similar way, although survivorship rights here are automatic. A “joint tenancy” with express rights of survivorship in a deed, meanwhile, can include multiple individuals and not just spouses.

You may not even “own” some of your property at all. Your wealth planning may include setting up a separate trust to deal with specific assets either before or after your death.

How you distribute your property matters

As mentioned, it’s usually best to keep assets out of the probate process, which can be a lengthy and costly affair (including in terms of estate taxes). Assets held in your individual name only are required to pass through a probate court, which determines their distribution according to your will and local laws of succession. Assets held in a trust or owned jointly with rights of survivorship, however, can be passed on while avoiding this process – and so can those with a named beneficiary designation.

Designated beneficiaries are perhaps most common in life insurance policies, where you choose who receives the payout on your death. But bank accounts and brokerage accounts are two other examples of assets that a nominated person (or persons) can access immediately when you pass away without the need for probate.

The type of asset titling you choose to use ultimately depends on the characteristics of an individual asset, the local tax and legal landscape, and the balance of flexibility and certainty you’re seeking for the future distribution of your estate. Remember too that your plans could change later in life: it’s always wise to review your asset titling periodically and consult with your wealth planner at key strategic stages.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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