Definition of the Week: Third Parties

Third Parties: The best way to define a "third party" is with an example.

Suppose you decide to give your car to a friend. You deliver to your friend the signed title and the keys. In this transaction, you are the first party. Your friend is the second party. And the Division of Motor Vehicles or DMV, where the new title must be recorded, is the third party. The DMV is not a party in the transaction between you and your friend, but they are involved in recording the transaction.

A third party is a "person who is not a party in a transaction or agreement, but is involved in or affected by the transaction or agreement." (Black's Law Dictionary)

The importance of third parties in Asset Transfer Planning cannot be underestimated. These third parties include county recorders, banks, motor vehicle divisions, investment firms, life insurance companies, transfer agents, retirement fund custodians, and others. To transfer ownership of assets, you, your fiduciaries, and your beneficiaries have no choice but to work with these third parties and comply with their policies and rules.