Titling your Property for Maximum Asset Protection

/in , /by

The Secret to Asset Protection: Why How You Title Your Property Matters

You can have the most thoughtfully drafted will or trust, but if your assets are not titled correctly, your entire plan can fall apart. How you own your property—the legal title on your home, car, and bank accounts—is the foundation of your asset protection strategy. A lack of an overarching plan that aligns your titles with your documents can leave your family vulnerable to creditors, lawsuits, and unintended consequences.

Your Home: A Powerful Shield for Married Couples

In North Carolina, when a married couple buys a home together, they typically own it as Tenants by the Entirety. This special form of ownership provides its own powerful asset protection. If a creditor has a valid judgment against only one spouse, they generally cannot seize the home to satisfy that debt. This is because the property is legally owned by the marital unit, not the individuals. This is one instance where joint ownership is highly advantageous.

Your Vehicles: A Surprising Liability Trap

Conversely, the titling of your vehicles requires a different strategy. Many families title their cars in both spouses’ names. However, due to a quirk in North Carolina law, this can be a mistake. If a vehicle is jointly owned and is involved in an accident, the passenger who is also a co-owner of the car may be barred from collecting for their injuries from the driver’s insurance. To maximize protection, we typically recommend that each vehicle be titled in the name of only one person—usually the person who drives it most frequently.

Your Financial Accounts: Beneficiary Designations Rule All

Many of your most valuable assets, such as bank accounts, investment accounts, life insurance, and retirement funds, will pass to your heirs based on their titling and beneficiary designations, not your will. These contracts with financial institutions will always trump the instructions in your will or trust.

  • Joint Accounts (JTWROS): Accounts owned as “joint with right of survivorship” will automatically pass to the surviving owner.
  • Beneficiary Designations: Life insurance policies and retirement accounts are paid directly to the beneficiaries you have named on the contract.

It is critical to review these designations regularly, especially after a major life event like a death or divorce. Failing to update a beneficiary is one of the most common and heartbreaking errors in estate planning.

Your Trust: The Final and Most Important Step is Funding

Many people who invest in a comprehensive trust fail to take the final step: funding it. A trust is an empty vessel until you legally transfer ownership of your property into it. Without proper funding, your trust is just a piece of paper, and your assets will still have to go through the public and costly probate process.

True asset protection is achieved when every asset is thoughtfully titled as part of a comprehensive review of your estate plan. Call our office at (919) 256-7000 to schedule a consultation.