When someone dies with or without a will, some assets must go through probate. Florida probate courts do not become involved with “transfer on death” accounts, as TOD accounts automatically execute once someone passes away. Some may wonder about setting up as many TOD accounts as part of their routine estate planning.
Common transfer on death accounts
Transfer on death designations are commonly associated with investment accounts. If someone has a brokerage account, one with stocks, individual retirement accounts, and mutual funds, the investor could name one or more beneficiaries. Providing the beneficiary’s name and date of birth might be enough, but some accounts may require a Social Security number, as well.
When the primary account holder passes away, the account transfers to the beneficiary. The beneficiary must provide a death certificate and, likely, must complete a particular TOD form. The probate court has nothing to do with the process. However, had the account not have a co-owner or any beneficiaries, probate becomes necessary to transfer the assets. Probate decisions would come from the directions in a will. Without a will, the court relies on intestate laws.
Reasons for avoiding probate
The common reasons estate planners may wish to avoid probate center on cost and efficiency. Probate takes time and money to complete. TOD actions move much faster, come with no costs, and, likely, don’t burden beneficiaries with stress.
Jointly held accounts would not provide anything to beneficiaries if the other account holder is alive. The surviving account holder could even change the beneficiaries if desired. So, anyone hoping to prevent an heir from being disinherited from an account might want to rethink TOD estate planning ideas.
An attorney could explain probate and how it works. The attorney may advise a client on steps to avoid probate where necessary.