In recent years, it has become increasingly common for individuals to add the name of a friend or a relative to the title, or deed, of an asset. This primarily occurs due to a desire to either prepare for the asset to be passed on to that person after the eventual death of the original owner, or as is often the case with bank accounts, to allow the person whose name has been added to assist in managing and monitoring the asset. For anyone who is contemplating bankruptcy, such a circumstance might well lead them to question the extent to which the inclusion of their name on a title or deed could be relevant in bankruptcy, and if so, how?
In Minnesota, title is generally indicative of ownership. This means that in a vacuum, a court will assume that whoever is named on the title or deed of an asset (such as a car, home, bank account etc.) is the owner of that asset. If there are multiple people named on title or deed, they will all generally be considered owners in equal proportion. Thus, if you have been added to the title or deed of a property, vehicle, account or other similar item, you will generally be considered a co-owner of that item alongside the other people named on the deed or title.
There are exceptions to this of course, with one of the most significant being situations in which people are added as conditional, or future, beneficiaries. This is common with certain types of financial accounts, where someone can be named as a future heir to the account, with ownership set to transfer upon the passing of the account’s current owner. In this instance, the conditional or future beneficiary is not viewed as an owner of the account, because they have no current right to the account or its assets. Theoretically, they could also be removed from the account at any point in time as well, making any future ownership similarly uncertain.
Another common exception would be a circumstance where someone is added as an authorized user on a financial account, or similarly where someone may be custodian of a bank account that belongs to someone else. This is very common for parents with minor children, or for someone serving as a representative-payee for disability benefits. In either instance, so long as the contents of the account are all traceable to its actual owner, and the custodian or authorized user does not use the account as if it was their own, the custodian or authorized user will typically not be considered an owner.
However, in situations where such an exception does not exist and you are named on the title or deed of an asset without any qualifying circumstances or extenuating limitations, you will typically be viewed as its owner (or co-owner). The question then becomes, how will this ownership interest affect my bankruptcy? The answer, in short, is that the property in question will be treated in the same way that any other property would be treated in a bankruptcy filing. If you are named on the title to a car alongside one of your parents, it would be viewed in the same way that it would if you owned a similar amount of equity in a car that you owned exclusively in your own name.
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However, this does not mean that the asset cannot be protected, or that you will be prevented from filing because of your name being included on the title. To the contrary, there are many ways in which a bankruptcy can be tailored to make sure that your interest in this asset, and the asset itself, are protected throughout the course of the bankruptcy process. In speaking with an attorney at our firm we will advise on how the bankruptcy process can be tailored to protect shared assets, and ensure that your bankruptcy is structured to work for you. So, when the time is right, or when you are ready, please don’t hesitate to reach out to Minnesota’s most kind and helpful bankruptcy law firm by going now to www.lifebacklaw.com.
