Overview
Retitling assets means changing the legal name or ownership structure attached to property — for example, moving a house from an individual’s name into a trust, adding a joint tenant, or changing a brokerage account’s beneficiary designation. It’s a common tool in estate planning and asset protection, but it’s not a one-size-fits-all solution. The right approach depends on your goals (creditor protection, probate avoidance, tax planning, or Medicaid planning), the type of asset, and state law.
In my practice advising clients on estate and liability strategies, I’ve seen retitling solve problems quickly when coordinated with legal and tax advice — and create avoidable complications when done independently. Below I outline practical steps, likely benefits, and the most important pitfalls to watch before changing titles.
Common reasons people retitle assets
- Avoid probate and ease transfer to heirs.
- Reduce exposure to creditors or business litigation.
- Preserve eligibility for public benefits (when done as part of a larger plan).
- Control how and when heirs receive assets.
- Simplify management if disability occurs (through a revocable trust or POD/TOD designations).
Authoritative guidance: the IRS and Consumer Financial Protection Bureau provide information about tax and transfer issues and why coordination with professionals matters (see: https://www.irs.gov/ and https://www.consumerfinance.gov/). For Medicaid-specific and estate-recovery cautions, see Medicaid.gov: https://www.medicaid.gov/medicaid/ltss/eligibility/estate-recovery/index.html.
Practical, step-by-step checklist before you retitle
- Define the objective. Are you targeting liability protection, probate avoidance, tax efficiency, or Medicaid planning? The objective dictates vehicle choice.
- Inventory assets and how each is held. Real estate, bank accounts, brokerage accounts, retirement plans, life insurance, and vehicles have different rules and consequences.
- Review beneficiary designations first. Retirement accounts and life insurance transfer by beneficiary designation and usually should not be retitled into trusts; instead update the beneficiary form.
- Consult an estate attorney and tax advisor. Professional review reduces surprises like gift taxes or lost basis.
- Analyze tax consequences. Moving an asset can be a gift (with gift-tax reporting) or trigger capital-gains tax issues later. IRS guidance on estate and gift taxes is essential background: https://www.irs.gov/businesses/small-businesses-self-employed/estate-and-gift-taxes.
- Check Medicaid look-back and state rules. Transferring assets to avoid Medicaid eligibility can trigger penalties; consult Medicaid guidance: https://www.medicaid.gov/.
- Use correct documents and record them. Deeds, transfer-on-death forms, trust funding instruments, and LLC membership transfers must be executed and recorded per local rules.
- Notify relevant institutions and update insurance/policy records.
- Keep a clear audit trail: recorded deeds, signed transfer forms, trustee acceptance letters, and updated beneficiary forms.
Vehicles and how they work (concise)
- Revocable living trust: Good for probate avoidance and seamless management in incapacity. Assets in a revocable trust are still treated as owned by you for income and estate-tax purposes while you’re alive, so they don’t provide creditor protection from your own creditors in many states.
- Irrevocable trust: Can remove assets from your taxable estate and provide creditor protection if structured properly, but you usually lose direct control over the assets.
- LLC or corporation: Common for rental property and businesses to separate business liabilities from personal assets; proper formation and maintenance of corporate formalities matter for protection.
- Joint ownership or tenancy: Adds survivorship but can expose your co-owner’s creditors to the asset and has gift-tax implications if you add someone.
- POD/TOD beneficiary designations: Simple for bank and brokerage accounts for nonprobate transfer — but these bypass trust terms and can create conflicts.
For details on moving assets into a trust correctly, see our guide “Trust Funding: How to Move Assets into a Trust Correctly” (https://finhelp.io/glossary/trust-funding-how-to-move-assets-into-a-trust-correctly/). For larger comparative strategies, see “Asset Protection — LLCs vs Trusts for Asset Protection: Practical Scenarios” (https://finhelp.io/glossary/asset-protection-llcs-vs-trusts-for-asset-protection-practical-scenarios/).
Key tax issues to consider
- Gift tax: Transferring an asset to another person or into some trusts can be a taxable gift requiring Form 709 if above annual exclusion amounts. Check IRS guidance on gift taxes.
- Step-up in basis: For assets passing at death, heirs often receive a step-up in basis to fair market value, which can reduce capital gains tax when they sell. Retitling before death may remove that step-up.
- Capital gains and transfer basis: When you gift an appreciated asset, the recipient takes your basis for future capital gains calculations (carryover basis), potentially increasing future tax bills.
- Mortgage due-on-sale: Some mortgages include a due-on-sale clause triggered by change in ownership; consult the lender before transferring mortgaged property.
Common pitfalls and how to avoid them
- Retitling retirement accounts into a trust. Retirement plans have tax rules and are best managed with beneficiary designations; incorrect retitling can trigger immediate taxation. Always update the plan’s beneficiary form rather than changing title.
- Using joint tenancy to avoid probate without considering creditor exposure. Adding a child as joint owner may expose the property to the child’s creditors and can be considered a gift for tax purposes.
- Creating unintended gifts (and gift-tax liability). Any transfer that isn’t a sale for full market value can be treated as a gift.
- Losing Medicaid eligibility or triggering Medicaid penalties. Medicaid has look-back rules; transferring assets within the look-back period can create ineligibility.
- Revocable trusts don’t shield assets from your personal creditors in many states. Clients seeking protection often must use irrevocable structures or carry adequate insurance.
- Not recording a deed or transfer. Unrecorded title changes are ineffective against third parties.
- Failing to update estate documents and beneficiary forms. Conflicting beneficiary designations vs. trust language is a source of litigation.
Costs and timing
Expect costs for attorney drafting, title company or county recording fees, and possible transfer taxes depending on state and asset type. LLC formation and annual maintenance have separate fees. Some retitling transactions (e.g., deeds) can be completed in a few days; more complex trust-funded transfers and corporate transfers take weeks and require coordination with banks and brokers.
Real-world examples (anonymized)
- Probate avoidance: A married couple funded their revocable trust with real estate and brokerage accounts. After one spouse died, the surviving spouse avoided probate and accessed accounts immediately. The trust paperwork had been professionally prepared and assets properly retitled.
- Medicaid error: An older client transferred the family cottage to a child to avoid Medicaid estate recovery. Because the transfer occurred during the Medicaid look-back period, the client incurred a penalty period of ineligibility. Proper planning with an attorney could have used a different vehicle.
- Liability protection: A small-business owner moved investment rental properties into an LLC and placed the LLC membership interests into a family trust for estate planning. This layered approach combined corporate separation with trust transfer for smoother beneficiary control (see our layered liability guide: https://finhelp.io/glossary/layered-liability-combining-llcs-insurance-and-trusts/).
Practical tips I use with clients
- Always coordinate title changes with beneficiary forms for retirement and insurance products.
- Fund a trust properly: signing the trust is only step one; you must retitle each asset into the trust itself.
- Preserve liquidity when transferring: ensure the transferee entity has access to cash to pay taxes, insurance, and maintenance costs.
- Keep a master list of asset titles, account numbers, and the current owner/beneficiary to share with your executor or trustee.
When to get professional help
Get an estate attorney for deed transfers, irrevocable trust work, and Medicaid strategies. Consult a CPA or tax attorney for gift, income, and estate tax issues. Use a corporate attorney or formation service for LLCs to ensure ongoing formalities.
Bottom line
Retitling assets is a powerful tool when strategically aligned with your goals and coordinated with legal and tax advice. It can shorten probate, simplify management, and—if structured correctly—offer protection. But it can also create tax liabilities, harm Medicaid eligibility, or expose assets to new creditors if done without proper planning. If you’re considering retitling, begin with a clear goal, inventory your holdings, and consult qualified advisors.
Disclaimer
This article is educational only and does not constitute legal, tax, or financial advice. For a plan tailored to your circumstances, consult a qualified estate attorney or tax professional.
Sources and further reading
- IRS — Estate and Gift Taxes: https://www.irs.gov/businesses/small-businesses-self-employed/estate-and-gift-taxes
- Consumer Financial Protection Bureau — Consumer resources on estate planning and protecting assets: https://www.consumerfinance.gov/
- Medicaid — Estate Recovery and planning cautions: https://www.medicaid.gov/medicaid/ltss/eligibility/estate-recovery/index.html
- FinHelp: Trust Funding: How to Move Assets into a Trust Correctly: https://finhelp.io/glossary/trust-funding-how-to-move-assets-into-a-trust-correctly/
- FinHelp: Asset Protection — LLCs vs Trusts for Asset Protection: Practical Scenarios: https://finhelp.io/glossary/asset-protection-llcs-vs-trusts-for-asset-protection-practical-scenarios/
