Asset Titling Primer

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Asset titling can have a significant impact on how your property is handled after your death, both on how and to whom it passes.

Titling can be a complex topic, depending on one’s state of residence, your relationship to the other owner(s) and the type of asset involved. Each titling option has distinct advantages and disadvantages that are important to understand when choosing the appropriate way to hold assets. This article provides an overview of the most common asset titling options and their basic structures.

Joint Tenancy with Rights of Survivorship (JTWROS)

Joint Tenancy with Rights of Survivorship is an account titling between two or more people in which all tenants own equal shares of the asset. Owners do not need to be married or related in any way. When one owner passes away, that individual’s share automatically passes to the other owner(s), without the need for probate. Account owners cannot choose to pass their portion of JTWROS assets to any non-owner by will or any other instrument.

Each owner has control over his or her portion of the asset, however, if one owner transfers their portion to a third party, that third party then becomes a Tenant in Common (discussed below) and survivorship rules therefore would not apply.

Upon the death of one of the owners, that person’s share of the asset receives a step-up in cost basis. The surviving owner’s share does not receive a step-up unless the asset is held in a Community Property state, in which case the entire asset would receive a step-up in cost basis.

Community Property (CP)

Community Property assets can only be owned between married couples. Spouses are considered equal owners for CP assets. There are nine CP states within the U.S.1, and three more that allow spouses to ‘opt-in’ for this type of ownership2. Each spouse may direct his or her portion of the asset to whomever they would like through their will, meaning that portion of the asset will pass through probate. Spouses may elect to include a rights of survivorship option on CP assets, which would allow that asset to pass automatically to the surviving spouse in the same manner as JTWROS assets.

At death, the deceased individual’s portion of the CP asset would receive a step-up in cost basis. If the spouses elect to include rights of survivorship, that asset would then receive a full step-up in cost basis following the first death. A full step-up in cost basis also applies for JTWROS assets owned in a CP state.

Tenants in Common (TIC)

Under a Tenants in Common structure, each owner holds a fractional share of the asset. That individual has total control over his or her ownership portion. This means that one owner may legally sell his or her share without the approval or consent of the other owner(s). Ownership does not need to be equal amongst the tenants, and the parties do not need to be married or related.

Each owner may direct how his or her portion of the asset is to be distributed at death. This is generally done in the person’s will. TIC assets are subject to probate at death, and the decedent’s portion of the asset will receive a step-up in cost basis.

Tenancy by Entirety (TBE)

Tenancy by Entirety is available to married couples in twenty-six states3, although some states only allow this registration for real estate4. Certain states may also allow this type of registration among domestic partners. Under this type of registration, spouses are treated as one legal entity; they are each considered to have full ownership of the asset, with joint control over it. Separate creditors of the spouses cannot access assets held in TBE (except in the event of a Federal tax lien). Joint creditors may have access to TBE assets.

Under TBE registration, neither party may sell the asset without consent of the other. Assets titled as TBE are considered to have rights of survivorship and therefore will pass automatically to the surviving spouse after the first death. The decedent’s portion of the asset will receive a step-up in cost basis. In the event of divorce, TBE assets will automatically convert to TIC.

Revocable Living Trusts

A Revocable Living Trust is a legal entity an individual or couple can create to hold investments, bank accounts, personal property, real estate and other assets. The creation of a Revocable Living Trust requires the use of an attorney but can be a valuable tool.

Assets held in a Revocable Living Trust avoid probate and allow the creator(s), known as the
grantor(s), to maintain control over how those assets are distributed to heirs. The grantor may serve as a trustee during his or her lifetime and can name a successor trustee to take over in the event the grantor becomes incapacitated or passes away. A Revocable Living Trust can be amended or revoked by the grantor(s) at any time. Unlike a will, which is public record (as is probate), a Revocable Living Trust is private and remains so after the grantor’s death. They are also more difficult to challenge in court than a will.

While a Revocable Living Trust can be a valuable tool, they may be costly to set up since an attorney’s expertise is required. When considering trusts as an asset titling option, there are a variety of factors to consider, many of which are beyond the scope of this paper. For more information, we have prepared a separate article discussing the use of trusts in more detail. Please talk to your Freestone Client Advisor for more on this topic.


Determining which asset titling method is best depends on a variety of factors, including but not limited to state of residence, marital status, and type of asset. Your Freestone Client Advisor can discuss your options with you and assist you in deciding what is best for your unique situation.

1Community Property states as of 2020 are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. 

2Alaska, South Dakota and Tennessee allow spouses to ‘opt-in’ to the Community Property system.

3Tenancy by Entirety is recognized for all property in Arkansas, Delaware, District of Columbia, Florida, Hawaii, Maryland, Massachusetts, Michigan (automatic for joint tenancy owned by married couples), Mississippi, Missouri, New Jersey, Ohio (if created prior to April 4, 1984 only), Oklahoma, Pennsylvania, Tennessee, Vermont, Virginia and Wyoming.

 4Tenancy by Entirety is recognized for real property only in Alaska, Illinois (homestead property only), Indiana, Kentucky, New York, North Carolina, Oregon and Rhode Island.

Important Disclosures: The information contained in this white paper is for informational purposes only and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. The information contained in this article is accurate as of the date submitted but is subject the change. Please consult your Freestone Client Advisor, a tax professional and/or an attorney to discuss legal and related items discussed in this article.

Posted By: Stephanie d'Ippolito, CFP®

Stephanie d’Ippolito, CFP®, is our Managing Director of Financial Planning. She is passionate about helping people and believes that financial planning can be a valuable tool for clients to understand and solve their unique financial problems. She lives in Seattle with her husband and two dogs, Toby and Thurman.