Transfer on Death

Transfer on Death (TOD)

Transfer on death (TOD) registration allows you to pass the securities you own directly to another person or entity (your “TOD beneficiary”) upon your death without having to go through probate.

By setting up your account of having your securities registered this way, the executor or administrator of your estate won’t have to take any action to ensure your securities transfer to whomever you designate. However, TOD beneficiaries must take steps to re-register the securities in their name(s). Usually, it involves sending a copy of the death certificate and an application for re-registration to the transfer agent or your financial advisor.

State Law

State law rather than federal law governs how securities are registered. Most states, including North Carolina (HB58/SB290, 2005), use the Uniform TOD Security Registration Act, although some have modified it.  In addition, brokerage firms decide whether or not to offer TOD registration.

As with most of your financial and investment accounts, remember to update your TOD beneficiaries as your life changes. For example, if a beneficiary you name predeceases you, you should update your beneficiary designations. Likewise, if you marry or divorce, adopt or have a new child/grandchild, make sure your beneficiary designations continue to reflect your wishes.

For more information about TOD registration, please visit the Uniform Law Commission. There you’ll find a summary of the Act explaining how TOD registration differs from joint ownership. You’ll also find a list of states that have adopted the Act and the full text of the act.

If you haven’t discussed TOD with your attorney or legal counsel, we recommend you do so to avoid any conflicts with your existing legal documents and wishes.

Source:  U.S. Securities and Exchange Commission

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