Subscribe to LexTalk to stay on top of today’s legal issue and trends.
Catapult Your Career |
Industry Insights & Trends |
Product Training & Tips
When thinking about estate planning, you should always be aware of how your assets are titled. There are several different forms of asset ownership in Wisconsin. The term ‘title’ simply refers to how a specific asset is legally owned. The form of ownership that you or your loved one has over an asset can have substantial financial and legal ramifications.
Forms of Asset Ownership
Individual ownership: You are the sole owner of the asset.
Joint ownership: You own the asset with at least one other party. There are several specific forms of joint ownership. It can include everything from a home that your own with your spouse to a business that you own with a partner.
Contract ownership: In Wisconsin, you can also transfer the legal ownership of property to a legal entity, such as a trust. A trust is essentially a legal relationship that is created to hold and protect certain assets. A living trust is a very useful estate planning tool and should always be considered for those looking to transfer assets in the future.
Three Benefits of Proper Asset Titling
Avoid probate: Probate is the legal process by which a court oversees the distribution of assets after a death. Generally, it is beneficial to avoid probate whenever possible. It can be an expensive and time consuming process. Further, it is public so there is a lack of privacy. Asset titling may help you avoid probate.
Minimize tax burden: Proper asset titling may also be able to help you protect your assets from excessive taxes. You may be able to minimize your estate tax burden along with minimizing your exposure to other forms of taxation. For example, many assets are eligible for what is known as a ‘step-up in basis’ when they are transferred with proper title. This tax issue can matter a lot in estate planning when considering asset tilting because how one takes title to an asset can affect their tax basis in that asset. Your tax basis is essentially the amount that you have invested in an asset. If you buy a vacation home worth $100,000, that amount is also your tax basis on the home. If the value of that vacation home goes up to $200,000, then you have ‘gained’ $100,000 in value. Your gain will generally be subject to some amount of taxation, depending on the specific asset. By stepping up in basis, you may be able to reduce your taxable gains on an asset.
Control: Finally, you likely wish to retain full control over your assets. Life circumstances change, estate plans change and also you may still wish to use an asset, such a home, at the current time. Proper asset titling can help you find the right tool to avoid the burdens of probate and excessive taxes while still maintaining control over your assets. In Wisconsin, a trust can often be an effective way to meet these goals. Fundamentally, a trust is a legal document that governs the management and distribution of the included assets.
Need Legal Assistance?
Asset titling is a complicated area of Wisconsin estate planning law. Determining how to best title your assets can be confusing, but proper asset titling has major benefits. If you have any questions about how titled assets can affect your financial planning, please contact an experienced Brookfield estate planning attorney for immediate legal assistance.