Transfer on Death (TOD)

• - Bank accounts and certificates of deposit (CDs)

- Brokerage or investment accounts

- U.S. Treasury securities

- Real estate, in states that permit TOD deeds

- Certain vehicles, depending on state law

Unlike joint ownership, TOD assets remain fully under your control during your lifetime—you can sell, transfer, or change beneficiaries at any time.

• - Avoidance of Probate: Assets transfer directly to the named beneficiary, bypassing lengthy court processes.

- Immediate Access: Beneficiaries can claim funds or property simply by presenting a death certificate.

- Cost Efficiency: Avoiding probate minimizes court costs, legal fees, and administrative delays.

- Maintained Control: You retain full ownership and can revoke or amend the TOD at any time.

- Privacy: Probate is a public process, but TOD transfers occur privately and confidentially.

For many clients, these advantages make TOD an appealing part of a larger estate planning strategy—but not necessarily a replacement for traditional instruments like Wills or Trusts.

• - Restricted Scope: TOD applies only to designated assets (financial accounts or registered real estate). Personal property, vehicles, and family heirlooms remain outside its reach.

- Lack of Contingency Planning: If a named beneficiary predeceases you and no alternate is listed, the asset may revert to probate.

- No Guardian Designations: TOD cannot name guardians for minor children—something only a Will can establish.

- Potential Conflicts: TOD instructions override Wills. If they contradict, the TOD designation prevails, possibly causing disputes.

A well-drafted Will ensures that non-TOD assets, personal property, and residual interests are distributed according to your complete wishes.

1. Designate a beneficiary for eligible assets or property.

2. Retain full control over the assets during your lifetime.

3. Upon death, the beneficiary provides proof (usually a death certificate) to claim ownership.

4. The institution or registrar updates the title or account ownership accordingly.

Each state’s law governs how TOD applies to real estate. For example, certain jurisdictions—like Georgia, Arizona, or Missouri—allow Transfer on Death deeds for homes or land, making probate unnecessary for property transfers.

• - Quick Access to Funds: Beneficiaries gain immediate access to cash for funeral costs or urgent needs.

- Cost Savings: Eliminates the need for probate filing fees and attorney charges.

- Privacy Preservation: Since TOD transfers do not go through court, your estate details remain confidential.

- Control Over Distribution: You can assign different beneficiaries for different accounts to suit your intentions.

However, using TOD alone without a comprehensive plan can create unintended complications for families.

- Limited Asset Coverage: TOD cannot transfer household items, jewelry, or unregistered assets.

- No Oversight Mechanism: TOD transfers lack the executor’s review process, risking unequal distributions.

- No Legal Safeguards for Minors: Funds inherited by minors may require separate guardianship proceedings.

- Potential for Disputes: Conflicts can arise if multiple TOD designations or outdated records exist.

To avoid these pitfalls, our attorneys recommend integrating TOD designations within a coordinated estate framework—one that includes a Will or Living Trust.

• - Address Residual Assets: Cover properties and items not eligible for TOD transfer.

- Provide Guardianship and Instruction: Ensure the care of minors and fulfillment of specific wishes.

- Prevent Legal Ambiguity: Synchronize TOD beneficiary designations with your Will to avoid conflicts.

- Maintain Flexibility: Use a Trust to manage timing, conditions, or tax strategies alongside TOD transfers.

This approach combines the speed of TOD with the depth and precision of a Will or Trust, protecting both your estate and your heirs.

A Transfer on Death (TOD) designation is ideal for individuals with modest or straightforward estates who wish to transfer specific assets—like bank accounts or registered real property—directly to beneficiaries without probate.

TOD arrangements are simple to create, low-cost, and easily updated during one’s lifetime. They work especially well for clients who:

• - Have a small number of titled assets;

- Want to avoid probate delays for liquid accounts;

- Do not need to set conditions for asset distribution; and

- Prefer flexibility to change beneficiaries at any time.

However, TOD designations are best viewed as a limited tool, not a full estate plan. They cannot manage complex assets or provide long-term protection for heirs.

A Living Trust, on the other hand, provides a far broader level of control and customization. It allows you to consolidate all assets—financial accounts, real estate, personal property, and even business interests—under one legal structure.

Trusts enable you to:

• - Establish detailed conditions for inheritance (e.g., age-based or milestone-based distributions);

- Avoid probate entirely for all covered assets;

- Protect beneficiaries from creditors or disputes; and

- Plan for incapacity through successor trustees.

For families with multiple properties, blended family dynamics, or significant wealth, a Trust provides the flexibility, privacy, and protection that TOD designations alone cannot achieve.

In short, TOD offers efficiency and immediacy, while Trusts offer comprehensive control and protection. Many clients find that the most effective approach is to combine both—using TOD for simple financial transfers and a Trust for complex or long-term estate management.