Mission Report # 2
Category: Special Series
ASSET OWNERSHIP SERIES
This arena of asset ownership is so important and commonplace it deserves its special series. This report introduces what asset ownership has to involve if your assets are to survive and thrive in this complex world. Oh, and possession is no longer 9/10 of the battle.
Ownership is more than you think.
You are probably going to want to carve your name into everything you own after reviewing this short but revealing commentary of one of the most, if not the most, consequential attribute of assets that you own - or do you really own them?
What's in a name or names or account numbers?
I used to go about my life not concerned about throwing assets willy-nilly into my name, the company name, my spouses name (joint accounts anyone), my partners name (Quit Claim deeds are not good), or a combination of some or all. Then I turned 30 a generation or so ago and realized that I had a future to consider, which meant my assets needed protecting. Or where they mine? The answer to that question was startling and confusing.
Here's the answer of what's in a name.
Let's talk possession (access), control (votes), entitlement to income, responsibility for safety, confidentiality, maintenance and licensing, tax consequences and attribution rules, insurance, and creditor protection. Then it gets really dicey when there are multiple owners of the same property or multiple owners of multiple properties, not even talking about people who are entitled to share assets even though it's not in their name (beneficial ownership). And do not get us going about estates, wills and conflicting legislation that can rotate your day like a tornado. Sometimes it doesn't even matter who paid for the assets.
So to make things a little easier we have included two flowcharts below that could help you distinguish the various considerations regarding present and future asset ownership.
Chart One: Asset Categories
Chart Two: Considerations
It's surprising how valuable some assets can become!
We had a client who owned multiple assets (home, recreational property, vehicles, investments all over the place, decent sized company, lots of toys, insurance policies - you name it). He died a happy man and sort of said to me "you can sort it out". What does that mean? Sorting it all out meant dealing with extended family (a nice way to put it), creditors, tax departments, beneficiaries, and all sorts of government legislation and institutions related to tax, family law entitlements, fees and deadlines (property transfer taxes, probate, legal) and my fiduciary responsibility - the usual nonsense.
The problem is these that issues all had to be dealt with in a mindful and excruciatingly detailed manner. I thought I was going to lose control at some moments - of my mind - and some of the assets. And the thing that struck me the most is that the name of the owner of the assets (the deceased - now the estate) had a lot to do with the outcome in certain instances (tax, liabilities to creditors, bank requirements) and little or nothing to do with the end result in other circumstances (claims under the wills variation legislation - those phantom beneficiaries - "but I was promised" they said), spousal entitlements (under family law), creditor malfeasance (anyone can make a claim or complaint against anything it seems).
Hint. Just because you were named an executor does not mean you have to accept the position. All this clearly indicates how serious ownership is and what it involves. It is not to be taken for granted. So my intention is to make sure I own hardly anything before I go - just keep enough to live - transfer the ownership of everything else. Live and let go. Let the new owners worry about it. Don't forget to throw my ashes downwind.
Next report in this series - a discussion of alternative
forms and structures of ownership.
But wait. We cannot linger until the full series of Mission Reports is delivered . We need to start thinking things through right way.
Here are some key areas you may want to immediately consider regarding important assets you own or are responsible for:
Does the documentation of ownership (titles, contracts, institutional documents) properly reflect who the owner is? Maybe things have changed (legislation, partners and creditors) and you have to rearrange ownership. That is a sticky wicket. Legal and tax consequences abound - but it may have to be done. Do not regret your procrastination.
Values of your assets have changed and this affects your borrowing position and relationships with others, one way or the other. Is that a glean in someone else's eye as they ponder their own intervention? Can you predict the consequences of these changes to asset values?
Your health or responsibilities to support others have impacted your life and your assets. Assets of others are involved as well. Now what is the most efficient use of joint assets? Whose resources and which resources are the best to use in these circumstances?
Your debt burden has increased or is vulnerable to uncontrollable employment, business or world events. You want asset protection but also want to maintain control of the assets. Is this even possible?
You have assets in joint names but no legal documents that bind entitlements of each party. Wars occur over such disputes.
Your matrimonial or partner (business or personal) circumstance is changing and it’s not for the better. Now you have to make the relationship suffer even more by protecting your share.
So much doom and gloom but events can cause the benefits of ownership to get out of control quickly. Guaranteed. Practical minimalist steps can be taken. Your life depends on it.
© Lookout Mission Central
Please note: This content has been prepared by Lookout Mission Central from the experience of numerous professionals. It is not part of a consultation or engagement. We recommend you discuss any content related to situations you may be in with your professionals.