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Using a TOD account to avoid probate

On Behalf of | Jun 1, 2021 | Estate Planning |

Estate planning is very important. Every adult in California needs to have a plan in place for the end of their life. Thinking it out beforehand can reduce the demands on survivors. There are several tools that people use to help streamline the distribution of their estates. These can include things like trusts and TOD accounts.

What is a TOD account?

A TOD, or transfer on death, account is an estate planning instrument that makes it easier to give assets to a beneficiary after death. Probate is a court process that can be frustrating and slow-moving. TOD accounts can be set up with a brokerage. They make it possible to transfer assets by simply presenting a death certificate to the institution on the passing of the account holder.

Why is this important? There are big expenses that can come at the end of life. Funerals are expensive. There are ordinary day-to-day expenses to consider, too. Mortgages and utility bills will need to be paid. So making it easier for a surviving spouse or child to access funds quickly is a great gift to give them.

Transfer on death accounts are regulated at the state level. They’re not difficult to set up. Like insurance policies, the beneficiaries should be changed if there’s a divorce or other major life event. Otherwise, the original beneficiary will inherit, regardless of what a will might say.

There are other nuances of TOD accounts, too, especially as regards naming a beneficiary who is still a minor. It’s wise to consult an experienced attorney about all aspects of estate planning. Setting up and managing a TOD account is no different.