Asset titling in the United States

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Flag of the United States.svg.png This article contains details specific to United States (US) investors. It does not apply to non-US investors.

Asset titling in the United States determines one's property rights during one's lifetime. How an asset is titled also determines how that asset is transferred at death. Assets can be inherited according to Will, by beneficiary designation, based on an agreement, or by state law. [1]


Common forms of asset titling for non-business property in the US (defined below) include sole ownership, various forms of joint tenancy, community property, and through revocable living trusts.

Joint tenancy by the entirety and community property apply to marital property.

Community property states
Sole ownership
Sole ownership is the most common form of property ownership. Under this title, a person or an entity solely owns all the rights and interests to an asset. If titled in one's name alone with no beneficiary, the asset passes through the probate estate upon death. If an individual has a will, the terms of the will determine how assets will be distributed. Without a will, state intestacy law determines how assets are distributed. Intestacy laws vary from state to state and typically distribute assets to a spouse, children, parents, grandchildren, siblings, or other relatives in varying orders of preference. [1]
Joint tenancy with right of survivorship
A way for two or more people to share ownership of real estate or other property. In almost all states, the co-owners (called joint tenants) must own equal shares of the property. When one joint tenant dies, the other owners automatically own the deceased owner's share. For example, if spouses own a house as joint tenants and one dies, the survivor automatically becomes full owner. Because of this right of survivorship, the property goes directly to the surviving joint tenants without the delay and costs of probate. [2]
Tenancy by the entirety
A special kind of ownership that's similar to joint tenancy but is only for married couples and, in a few states, same-sex couples who have registered with the state. It is available in about half the states. Both spouses have the right to enjoy the entire property. Neither one can unilaterally end the tenancy, and creditors of one spouse cannot force a sale of the property to collect on a debt. When one dies, the survivor automatically gets title to the entire property without a probate court proceeding. Also called "tenancy by the entireties." [3] [note 1]
Tenancy in common
A way two or more people can own property together, in unequal shares. Each has an undivided interest in the property, an equal right to use the property, and the right to leave his or her interest upon death to chosen beneficiaries instead of to the other owners (as is required with joint tenancy). In some states, two people are presumed to own property as tenants in common unless they've agreed otherwise in writing. [4]
Community property
A method of defining the ownership of property acquired during marriage, in which all earnings during marriage and all property acquired with those earnings are owned in common and all debts incurred during marriage are the responsibility of both spouses. Typically, community property consists of all property and profits acquired during marriage, except property received by inheritance, gift, or as the profits from property owned before marriage. Community property laws exist in Arizona, California, Idaho, Nevada, New Mexico, Texas, Washington, and Wisconsin. In Alaska, couples can create community property by written agreement. [5]
Revocable trust
A trust set up during life that can be revoked at any time before death. Revocable living trusts are a common way to avoid the cost and hassle of probate, because the property held in the trust during life passes directly to the trust beneficiaries after the trust maker's death, without probate court proceedings. The successor trustee - the person appointed to handle the trust after the trust maker's death --simply transfers ownership to the beneficiaries named in the trust. Certain revocable living trusts can also reduce federal estate tax. Also called "inter vivos trust. [6]


Titled property held in taxable accounts is subject to the tax laws in effect at the time, and taxes must be paid annually on earnings and asset sales.

A special provision of the tax code, known as stepped-up valuation, [7] [8] applies to taxable assets at death. [note 2] In most instances, a property's tax basis is stepped-up to current market value. Stepped-up valuation can differ, however, depending on how the property is titled.

  • Sole ownership, and sole or separate property [note 3] held in a revocable trust: The death of the asset owner results in the asset's stepping-up in value.
  • Joint tenancy: For assets held in joint tenancy, stepped-up valuation applies only to the deceased partner's share of the property.
  • Community property: Community property steps up whenever a spousal partner dies.

Beneficiary designation

In addition to asset titling, numerous accounts and financial instruments have an additional very important feature: the power to name both primary and contingent beneficiaries to an asset who will inherit the property after the death of the owner. Among the accounts and assets that allow the naming of beneficiaries are employer provided retirement plans, individual retirement accounts, life insurance, and annuities. Beneficiaries can include individuals, trusts, or charities.

An important consideration to keep in mind regarding naming beneficiaries on these accounts and financial instruments is that these beneficiary appointments supersede the beneficial appointments made in either a will or a trust. As a result, care should be taken to make sure that the naming of beneficiaries on these accounts is consistent with an individual's or a family's overall estate plan.

Retirement accounts

When appointing beneficiaries to retirement accounts, individuals need to be aware of special rules involving spousal rights. [9] Complications come into play when individuals want to name non-spousal beneficiaries to plan assets. This is common among blended families and second marriages, when marital partners desire that retirement plan investments flow to children. [10] Updating beneficiaries on retirement plans is also critical after a divorce.

Employer-provided retirement plans are governed by federal law which states that your spouse is entitled to inherit all the money in the account unless he or she signs a written waiver, consenting to your choice of another beneficiary. The consent must be witnessed by a plan representative or a notary. Prenuptial agreements are not valid. [11]

In community property states, a spouse also has precedence over other beneficiaries with individual retirement accounts (traditional and Roth IRAs). Once again, written consent is necessary if non-spousal beneficiaries are to be valid. [11]

Spousal beneficiaries of personal IRAs have a special right to treat an inherited plan as their own IRA. This is an important benefit, since by so doing the inheriting spouse is not required to immediately begin taking minimum distribution withdrawals. The inheriting spouse can delay distribution of a traditional IRA until required at age 70 and a half, or in the case of a Roth IRA, have no minimum distribution requirement.

Once an individual has inherited an IRA it is important to exercise the right of naming new beneficiaries to the account. This assures that the required minimum distribution option for account withdrawal is maintained for beneficiaries, allowing them to stretch out the payments should they so choose.

Payable upon death account registration

Certain assets can use payable upon death (POD) (also referred to as transfer-on death) accounts to designate beneficiaries to automatically inherit bank accounts, securities, vehicles, and real estate, without probate.

Payable-on-death bank accounts

Payable-on-death bank accounts are among the most prevalent forms of these types of accounts. To establish a POD bank account is simple. One fills in the required bank documents that establishes or re-titles an account, adding the name or names of the desired beneficiaries. The addition of beneficiaries to the account gives them no power over the account until the account owner, or the joint owners, die. To claim the account after the owner's passing, a beneficiary provides the bank with a death certificate and proof of identification. The bank will transfer the account title to the beneficiary.

A POD bank account does not allow the naming of contingent beneficiaries. So if there is a need to change beneficiaries it is critical to either close out accounts or to fill out new bank forms naming new beneficiaries. Keep in mind that the POD designation supersedes any directives given in a will or trust.

Spousal rights and community property rights require that a spouse must provide written consent if one wishes to name a non-spousal beneficiary to a POD bank account. [12]

Transfer-on-death securities registration

All states, with the exception of Texas and Louisiana, have adopted a law (the Uniform Transfer-on-Death Securities Registration Act) [13] that lets you name someone to inherit your stocks, bonds or brokerage accounts without probate.

To create a TOD account registration one needs to fill out a brokerage firm's or mutual fund firm's beneficiary or transfer-on-death (TOD) form. The individual firm has discretion over allowing TOD accounts for joint tenancy (only with the right of survivorship), community property, and for allowing alternate beneficiaries. [note 5]

Naming a non-spousal beneficiary to an investment account held as community property requires spousal consent. In non-community property states, spousal rights are dependent on state law.

If the beneficiary is a minor, one can name a custodian on the transfer-on-death form.

Beneficiaries can claim the TOD accounts by showing the mutual fund company or brokerage firm a certified copy of the death certificate and proof of identity.[14]

Savings bond registrations

I savings bonds and EE savings bonds allow for a number of different ownership registrations for both paper and electronic (treasury direct) bonds. The bonds can be registered as sole owner (electronic) or single owner (paper); for jointly owned accounts the registration is designated primary owner with secondary owner (electronic) or co-owners (paper).

The bonds can also be issued with payable on death registration: this is designated owner and beneficiary registration.

The bonds can also be registered to a revocable living trust.

If you plan to use the bonds for the education interest exclusion, you must be at least 24 years old on the first day of the month in which you bought the bonds and fall within income requirements. You must also register the bonds correctly. To use a bond for your own higher education you must be the owner of the bond. To use the bond for your child's higher education you and/or your spouse must own the bond. The child may be a beneficiary of the bond but may not be a co-owner. [15]

Transfer-on-death registration for vehicles

Some states (included in the table below) provide for TOD registration of automobiles and trucks. All you do is apply for a certificate of car ownership in "beneficiary form". The registration does not allow naming alternate beneficiaries. If you change your mind about beneficiaries you can either sell the vehicle or apply for a new certificate of ownership with the designation of new beneficiaries.

State law determines spousal rights in naming non-spousal beneficiaries.

To re-title the vehicle the beneficiary must submit to the state motor vehicle agency a death certificate, the old certificate of ownership (if available) and an application for a new certificate. If the vehicle is not yet paid for, the beneficiary inherits the debt obligation.[16]

TOD vehicle registration
  • Arizona
  • Arkansas
  • California
  • Connecticut
  • Indiana
  • Kansas
  • Missouri
  • Nebraska
  • Nevada
  • Ohio
  • Vermont

A number of states have special provisions that allow for the transfer of vehicles to spouses and beneficiaries without a TOD registration. Check with local practice.[17]

Transfer-on-death deeds for real estate

A number of states (included in the table below) permit what is called a transfer-on-death (TOD) deed or beneficiary deed. It works like a regular deed used to transfer real estate but doesn't take effect until your death. After the deed is signed it must be recorded with the local land records office before your death to be valid.

TOD deeds for real estate
  • Arkansas
  • Arizona
  • Colorado
  • Hawaii
  • Illinois
  • Indiana
  • Kansas
  • Minnesota
  • Missouri
  • Montana
  • Nevada
  • New Mexico
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Wisconsin

TOD deeds allow you to name an alternate beneficiary who will inherit the real estate if your first choice isn't alive at your death. Without an alternate beneficiary, state law determines inheritance.

As individual state law can have specific requirements for deeds, using legal counsel for drafting and filing the deed is advisable. [18]

You can change beneficiaries on the deed by selling the property or by revoking the deed and signing and filing a new TOD deed. [19]

At death, the beneficiary gains title to the property, along with any mortgage still remaining on the property. The new owner will probably need to record a sworn statement (affidavit) and a copy of the death certificate to process the title transfer. [20]


  1. The states that recognize tenancy by the entirety. See Wiki answers,"What states have tenancy by the entirety property ownership?"
    Tenancy by the entirety states Real estate only
    • Alaska
    • Arkansas
    • Delaware
    • District of Columbia
    • Florida
    • Hawaii
    • Maryland
    • Massachusetts
    • Mississippi
    • Missouri
    • New Jersey
    • Mississippi
    • Oklahoma
    • Pennsylvania
    • Rhode Island
    • Tennessee
    • Vermont
    • Virginia
    • Tennessee
    • Wyoming
    • Illinois
    • Indiana
    • Kentucky
    • Michigan
    • New York
    • North Carolina
    • Oregon
  2. Not all assets qualify for stepped-up valuation. Retirement accounts, annuities, and savings bonds are some of the more commonly held accounts and assets that the IRS considers income in respect of a decedent and does not step-up in value after the owner dies. See Income in respect of a decedent for additional information.
  3. In community property states, separate property is property owned and controlled entirely by one spouse in a marriage. At divorce, separate property is not divided under the state's property division laws, but is kept by the spouse who owns it. Separate property includes all property that a spouse obtained before marriage, through inheritance, or as a gift. It also includes any property that is traceable to separate property, and any property that the spouses agree is separate property. - from Nolo dictionary of legal terms, separate property
  4. Although joint ownership allows a spouse to inherit assets without probate, the surviving spouse now holds the property as a sole owner. At this juncture, using a revocable living trust or payable on death accounts is often recommended for asset ownership rather than joint tenancy with non-spousal partners. The potential problems associated with these joint tenancies include:
    1. The joint ownership means giving away part ownership of the property. The new owner can sell or mortgage his or her share -- or lose it in a lawsuit or divorce.
    2. You may have to file a gift tax return.
    3. The joint owner inherits all of the property after death; this may not be what the owner of the property intends.
  5. For example, Vanguard allows mutual fund and brokerage clients to open TOD account registration only for sole ownership. They do not allow the designation to be used for opening joint or community property TOD accounts. Vanguard does allow the naming of primary and alternate beneficiaries. See Vanguard Transfer on Death Plan for details.


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