Incorporating Transfer on Death Accounts into Your Estate Plan

What are transfer on death accounts?

You likely already have at least one transfer on death account, but you may not realize it.  Transfer on death accounts present a simple way to transfer some assets to your spouse or another loved one upon your death.  Properly setting up some transfer on death accounts could form a part of your comprehensive estate plan.  Our Orange County estate planning lawyers explain transfer on death accounts and why they can form a useful part of your estate plan below.

Defining Transfer on Death Accounts

Transfer on death accounts are created under state law to allow the account holder to name a beneficiary to receive the assets upon their death.  Depending on your state, transfer on death accounts could include bank accounts, stocks, brokerage accounts, and potentially even real estate deeds or automobile ownership.  Additionally, most retirement funds will automatically transfer to the named beneficiary upon your death.

Advantages of Transfer on Death Accounts

Ease of transfer is perhaps the main advantage of a transfer on death account.  Upon your death, the transfer on death or TOD account will directly transfer to the named beneficiary.  Critically, you will want to make sure your accounts have a named beneficiary and this beneficiary is updated should your life circumstances change.  The assets will transfer without the need for probate.

Importantly, most TOD accounts will transfer to the named beneficiary, even if you have a will or living trust that names a different beneficiary.  Your best bet is to coordinate your TOD accounts with your will or trust so as to avoid any disputes or need for court involvement.  Should you update your will, do not overlook updating your TOD accounts, as needed.

Control of TOD Accounts During Your Lifetime

While you are alive, you will maintain sole control of the account, unless the account is a joint one shared by a spouse or another loved one.  Your beneficiary does not have access to it as a result of being named beneficiary. You can always change your beneficiary designation, so long as you are mentally competent.

While transfer on death accounts should never be your sole estate plan, use of these accounts can allow for easy transfer of some of your assets upon your death.  Contact an estate planning lawyer to get started reviewing your estate planning needs today.

Brian Chew, the managing partner of OC Wills & Trust Attorneys, has extensive experience in the areas of estate planning, asset protection planning, business succession planning, long-term care planning, and veterans’ benefits. By devoting his practice to estate planning matters, he has founded a firm that strives to provide exceptional service to their clients by working closely with individuals and their families to create comprehensive and customized estate plans. For the past twenty five years, Brian has served thousands of clients in the matters of estate planning, wills and trusts. If you have any questions about this article, you can reach Brian Chew here.