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A Simple And Inexpensive Way To Have Your Assets Avoid Probate

Dealing with the passing of a family member is an emotionally draining experience and dealing with the financial tasks that come along with it can add to the stress. Proper planning and specifically, the titling of your assets can make your experience a bit less troublesome. A transfer on death account or TOD is a very simple means of having your non-qualified accounts (savings accounts, taxable brokerage accounts) transfer to beneficiaries of your choice and more importantly avoid the probate process. A TOD is often used when one does not have complicated estate goals (therefore more in-depth estate planning is not needed), but the account owner(s) would like the peace of mind knowing the account will go to their beneficiaries as intended. A TOD is recognized under state law, it costs nothing to set up and is extremely easy to execute. It is literally a 1-2 page form.

A TOD is revocable and can be changed as long as the account owner is living. The beneficiaries are named by the account owner and upon passing, the assets pass outside of probate. To receive the funds, beneficiaries typically present a copy of a death certificate to the financial institution along with valid identification and complete an acceptance. Once these items are satisfied the assets are then transferred as indicated in the TOD.

Some considerations:

  1. TOD is a non-probate asset and is not controlled by your will. (TOD will supersede the will)

  2. If all of the deceased’s liquid assets are passed by TOD and the primary assets in the estate are illiquid assets such as real estate or business interests, there may not be liquid funds available to pay some obligations. The executor may need to seek funds from the TOD beneficiaries.

  3. TOD accounts can be effective for smaller estates, but may not be appropriate for larger estates.

I suggest you work with a trusted financial professional who is familiar with your financial picture and wishes. Please email me with any questions or to read more about estate planning visit the estate planning section of our webpage .

Disclosure: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Newpointe Wealth and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.


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