Types of Property Ownership

Choosing the proper type of property ownership becomes more important as your net worth grows.

There are many ways to title your assets and knowing the advantages and disadvantages of each can make a big difference in how your assets are taxed and how the assets will be handled when you pass.

Typically, when you go down to the bank, or investment firm or any other financial institution, they will ask you if you want your account to be a single account in which you are the sole owner, or a joint account.

Another option you have is to title things in the name of a company or business you own.

Of course you can also set the account up as a trust account and there are many different forms of trusts.

Finally, you can choose to title your assets in the form of a Transfer on Death (TOD) or Payable on Death(POD) account which may help your heirs avoid a costly and time consuming probate.

The options you choose determine not only the ownership in the assets and who has the ability to control those assets, but also, this decision can affect your taxes.

For example, setting up a corporate account may mean higher or lower taxes on the interest you receive on those assets.

Some trust accounts may also have certain tax advantages.

Additionally, if you title an account in the name of a minor child in the form of a UTMA or UGMA account, there may be certain tax benefits to this as well.

But the most important way that property ownership choices affect your wealth is that this choice determines how your assets will transfer to your heirs when you die.

The proper choice will ensure that your assets don’t have to pass through probate and will go directly to your heirs.

That's why the decision of how to title your assets is a big part of your estate plan.

Of course sometimes this type of solution can seem costly. For example, setting up a corporation or a trust can cost thousands of dollars. But sometimes it’s worth it to pay that money now in order to save your estate much more in the future.

In addition, competition and the internet have made most property ownership forms extremely affordable if not free.