How Investment Accounts Should Be Titled For Estate Planning Purposes

How investment accounts are titled can make things really simple or really difficult upon the death of an owner of investments. Typical options for titling an investment account include:

  • Separate Property
  • Community Property
  • Transfer on Death (TOD)
  • Payable on Death (POD)
  • Joint Tenancy With Rights of Survivorship (JTWROS)
  • Tenancy By Entirety
  • Tenancy In Common (TIC)
  • Trust Account

Most of our clients who have trusts title their investment accounts in the name of their trust, in order to provide for continue access by family members, and for probate avoidance purposes.

Tenants in Common Example. Fred and Rita establish an investment account with their investment advisor, and they title their account, "Fred and Rita, Tenants in Common." When Fred died, his portion of the account was frozen and Rita was required to complete Fred's probate to gain access to those investments. Then, when Rita later died, Rita's heirs (her children) were required to go through probate again to gain access to Rita's account, which the investment company was required to freeze once Rita died.

Trust Account Example. Ben and Carolyn establish an account with their investment advisor. Since Ben and Carolyn had previously established a revocable living trust, Ben and Carolyn titled their investment account, "Ben and Carolyn, as trustees of Ben & Carolyn Revocable Living Trust." When Ben later died, the account was not frozen. Carolyn, as the trustee, continued to have access to the account. Then, when Carolyn later died, the Successor Trustee that Ben and Carolyn had named in their Revocable Living Trust, would continue to have access to the account so that she could distribute the assets to the principal beneficiaries named in the trust (often the children of the couple that sets up the trust).

Many individuals, couples, and financial advisors do not give much thought regarding how investment accounts should be titled. But doing this correctly can save a significant amount of time and money upon the disability or death of one of the account holders.