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Opting for transfer-on-death accounts


Estate planning could involve steps that minimize the duties and stress on beneficiaries. Setting up transfer on death designations could help Texas estate planners achieve such goals.

Transfer on death accounts explained

Essentially, when one person owns an asset, the law guides who receives the asset after the person dies. So, the decreased home would enter probate if it did not have a joint owner with rights of survivorship. The state’s intestate statutes govern the ownership transfer when the owner dies without a will. The same proves true when discussing bank and other financial accounts owned by one person unless the account lists a beneficiary.

Brokerage and bank accounts are two financial assets that may allow someone to list a beneficiary under a transfer on death (TOD) agreement. With these accounts, the ownership switches to the beneficiary upon the financial company’s receipt of documents that prove that the other account holder has died, such as a death certificate. The financial institution could request a completed form to complete the transfer.

The probate court would not address issues related to transfer on death accounts. After all, the owner designated someone who becomes the new owner upon his or her passing.

Transfer on death accounts and estate planning

Those involved in estate planning may wish to consider naming beneficiaries on accounts that accept the transfer on death designations. Probate could take time to complete. Ensuring some assets transfer quickly and outside of probate could make things easier for survivors.

Estate planners may wish to list more than one beneficiary. An account might allow the account holder to designate allocation percentages. That means one beneficiary could receive 65% and the other 35%.

Updating beneficiaries might be necessary. Circumstances and relationships could change, prompting a revision to beneficiary designations.