Titling and owning your property correctly will provide maximum asset protection for you and your family. Lack of an overarching estate plan may leave you vulnerable to predators and creditors. Title your car, house, bank accounts, investment accounts, retirement accounts, life insurance and trust assets properly for the greatest protection.
North Carolina has unique requirements for titling motor vehicles. Many families will own vehicles jointly, where husbands and wives will put both of their names on the title to a vehicle. We recommend that families put only one driver’s name on each vehicle (typically whoever drives each vehicle the most frequently). In North Carolina, if the vehicle is titled in both names and there is an accident, the passenger of the vehicle will not be able to collect for his or her injuries if he or she is a joint owner. However, if the injured passenger is not an owner of the vehicle, he or she can collect against the driver even if the passenger is insured under the driver’s insurance company on a different vehicle. For this reason, titling your property correctly is an important aspect of asset protection.
However, owning a home works the opposite. If a husband and wife buy a home together, they will own the property as tenants by the entirety. This form of ownership provides its own asset protection, as if a creditor comes after only one spouse with a valid judgment, the creditor cannot recover against the home. This is because the judgment is only valid against one spouse, and both husband and wife own the house as tenants by the entirety. Titling your property properly can protect your assets from creditors.
Many people who pay for expensive trusts fail to fund them properly. Your trust will not work unless you transfer ownership of the property that you hold jointly or individually to the name of the trustee. Without proper funding, a trust is just a document that will create probate and administration expenses later. For this reason, title your property to your trust correctly so that your estate plan will work the way that you want.
Finally, many lack asset protection because they fail to title their property in a way that’s consistent with their overarching estate plan. Many married couples create joint accounts with right of survivorship. The contract that they create with the bank supersedes any will or trust, so that when one spouse dies, the other receives the account outright. Most investment accounts for married couples are also held as joint with rights of survivorship. Finally, individuals purchase life insurance and create retirement accounts, both of which are held with beneficiary designations. All of these provisions will trump a well-thought out will or trust, which is why it is important to make sure that your property is titled properly in accordance with your overarching estate plan. It is also important to check your beneficiary designations in the event of a life change. Asset protection issues most often arise when a deceased spouse is the only designated beneficiary. Always name children or a trust so that your assets will not go to your estate, which creditors can reach.
If you or your loved one needs assistance titling your property, or if you have questions about government assistance programs such as Medicaid or Veteran’s Benefits, consider W.G. Alexander & Associates – we offer a unique blend of asset protection, Elder Law and estate planning. You can also attend our free seminars, learn more through our website at www.wgalaw.com, or call us at (919) 256-7000. Also, every Tuesday morning at 9 am, you can listen to our radio show, “Asset Protection Today,” on Talk Radio 850 WPTK (AM) with Attorney Bill Alexander.