Money Management Newsletter

Estate Planning Series:

Managing and Transferring Assets

Dr. Jo Turner

Professor, Family and Consumer Economics

Managing Assets

At some point in your life you may become ill or incapacitated and need someone to manage your assets.  A power of attorney or a trust agreement may be the solution to your problem.

A power of attorney is a legal document authorizing someone of your choice to act for you.  The power may be general and broad or limited to specific functions.

A trust can also serve a management function for your financial affairs.  A trust is a legal arrangement through which a third party, a trustee for either your benefit or that of your beneficiaries holds your assets.

Transferring Assets

A number of methods can be used to transfer property including gifting the property to the desired beneficiary before your death to leaving property in trust for the beneficiary to receive at some point after your death.  Whatever methods you choose to distribute your property after death, careful planning will enhance the likelihood of an orderly transfer with minimum taxes.

At death, the individual settling the estate for the deceased must locate and list all property.  This listing is made so that the court can decide whether any death taxes are due to the state and federal governments, and so that all the property can be distributed to the heirs.

A total of the property owned is called the gross estate, and consists of everything that belongs to the deceased, either individually or jointly with others.  This property may be in the form of land, buildings, equipment, money, stocks, bonds, or other financial assets and personal possessions.

Florida law permits property to be held in one of four ways.  The implications for managing and transferring property are different for each type. 

  1. "Sole ownership" often called fee simple is one way to own property.  The sole (one) owner has the right to sell, mortgage or give away the property during his/her lifetime and to name the recipient of the property after death by using a will.
  2. "Tenancy by the Entirety" is a form of ownership that exists in Florida, the District of Columbia and 23 other states.  This form of ownership is restricted to property held between a husband and wife.  No one owner may sell or dispose of his or her portion without the permission of the other owner.  At the death of one owner the property automatically passes to the surviving spouse.
  3. "Joint Tenancy with Rights of Survivorship" is the most common form of co-ownership.  Individuals who hold property this way have an interest, which is undivided and fractional, that is they all own it together, not in equal shares.  When an owner dies the total property held in this manner becomes the sole property of the other owner(s).  This property does not need to be listed in a will, since the owner(s) has/have been designated.  Most joint bank accounts are held this way.  This does not mean that transfer will occur immediately or that taxes won't have to be paid.
  4. The fourth type of ownership is called "Joint Tenants in Common" or "Tenancy in Common."  When this term is used on ownership papers, each owner designates his or her heirs.  It is generally assumed, unless otherwise specified, that all tenants own equal shares.  Each tenant may designate through a will who is to receive his/her share of the property.

People who hold property in sole ownership or fee simple, or as joint tenants in common should write a will indicating how they want the property to be distributed.  Otherwise, in the absence of a will, laws of descent and distribution will determine who gets the property.   

Remember real property is subject to laws of the state in which it is located.  Therefore if you own real estate in several states make sure your will complies with laws in all those states.  It is recommended that your will be reviewed every five years or when changes have occurred in your life such as marriage, divorce, children leaving the nest, or death of an heir.

Information sources:

Garman, E. Thomas and Forgue Raymond E.  Personal Finance. 6th ed.  NY: Houghton Mifflin Company. 2000.
www.forbes.com "What's an entirety?"

 Original Publication date: August 2001.