Disclaimer: The information provided in this blog post is for general informational purposes only and does not constitute legal advice.  No attorney-client relationship is established by reading this post.  Each individual’s situation is unique, and laws can vary by jurisdiction. Always consult with a qualified attorney about your specific circumstances before making any legal decisions. 

Planning for the future can feel daunting. One of the key goals of estate planning is making sure your assets end up in the hands of the people (or organizations) you care about—quickly, effectively, and with as little hassle as possible. One tool that can help accomplish this is the Transfer on Death (TOD) designation.  

A TOD designation allows you to name a beneficiary who will automatically receive certain assets upon your death. Common assets that can carry TOD designations include:

• Bank accounts (often known as Payable on Death accounts, or POD)

• Brokerage accounts

• Stocks, bonds, or mutual funds

• Real estate (in Ohio, via a Transfer on Death deed)

• Motor vehicles

With a TOD in place, upon the owner’s passing, the asset transfers directly to the named beneficiary without going through probate, which can streamline the estate administration process.

Benefits of TOD Designations:

·  Avoiding Probate.  One of the primary benefits of a TOD designation is that it helps bypass the probate process. Probate can be lengthy and expensive, depending on the complexity of the estate. By using TOD, you ensure that selected assets transfer directly to the named beneficiary—often much faster.

·  Simplicity and Convenience.  Setting up a TOD is usually a straightforward process through your financial institution or by preparing a TOD deed (for real estate). Most of the time, all it takes is completing a form with your account provider or filing proper paperwork with the county recorder.

·  Control During Your Lifetime.  You remain in control of the account or property for as long as you live. A TOD designation does not grant the beneficiary any rights until after your passing, and you can change or revoke your TOD at any time (assuming you’re mentally competent to do so).

·  Privacy.  Probate records are often part of the public record, meaning anyone can potentially look up details about the estate. TOD transfers happen outside of probate, offering a greater level of privacy and confidentiality for your beneficiaries.

·  Cost-Effective.  Avoiding or minimizing probate can reduce legal fees and court costs, meaning your beneficiaries can often receive more of your estate’s value without incurring additional expenses. 

While TOD designations simplify certain transfers, they don’t replace the broader benefits of comprehensive estate planning. A well-drafted will or trust is still crucial for distributing other assets and covering scenarios that TODs don’t address.  If your will names one beneficiary, but your TOD form lists another, the TOD designation usually overrides what’s written in the will. It’s essential to keep your estate planning documents updated and consistent.  Finally, TOD provisions don’t apply to all asset types. Life insurance and retirement accounts have separate beneficiary designations that also avoid probate, but they operate under different rules. 

A Transfer on Death designation can be a powerful addition to your estate plan if you’re looking to:

• Streamline asset transfers for specific accounts or properties

• Provide a quick and straightforward inheritance process for loved ones

• Maintain control of your assets while ensuring a designated beneficiary

However, TOD designations work best when used in coordination with other estate planning strategies. Every individual’s situation is unique, so it’s wise to consult with an experienced estate planning attorney to tailor a plan that meets your needs and goals.