Transfer on Death (TOD)
What Is Transfer on Death?
Transfer on Death (TOD) is a legal designation that allows certain assets to transfer directly to a named beneficiary when the owner dies.
TOD designations are often used for:
- Brokerage and investment accounts
- Stocks and bonds
- Some real estate in certain states
- Vehicles in some jurisdictions
While the owner is alive, they retain full control over the asset.
Why It Matters
Transfer on Death designations help assets pass directly to beneficiaries without going through probate.
This can make estate administration faster and reduce legal complexity for heirs.
TOD designations are a simple planning tool that helps ensure assets go where the owner intended.
How Transfer on Death Works
The asset owner completes a form with the financial institution or property authority naming the TOD beneficiary.
Example: A person names their spouse as the TOD beneficiary of their brokerage account. When the account owner dies, the brokerage transfers ownership of the account to the spouse.
The beneficiary has no rights to the asset while the owner is alive.
Transfer on Death vs Payable on Death
Transfer on Death → Common for investments and securities
Payable on Death → Common for bank deposit accounts
Both allow assets to pass directly to beneficiaries.
FAQs About Transfer on Death
Can TOD beneficiaries be changed?
Yes. Owners may update beneficiary designations anytime.
Do TOD assets go through probate?
Typically no, because ownership transfers directly to the beneficiary.
Can multiple beneficiaries be named?
Yes. Assets can be divided among multiple beneficiaries.
Related Terms
