Probate may be a lengthy, inconvenient, and costly process. Transfer on death designations, however, allow the transfer of assets to designated beneficiaries after a person’s death without undergoing probate.
A TOD designation allows the beneficiaries or a spouse to receive property without undergoing probate. Beneficiaries do not have access to these assets before their owner dies. Transfer on death assets include individual retirement accounts, 401(k)s and other retirement accounts.
Unmarried individuals may choose anyone as a beneficiary. But a married person’s spouse has rights to some or all of a retirement account when their spouse dies.
Surviving spouses have more options for withdrawing money than other beneficiaries. Named beneficiaries may claim the money from the account custodian.
Under the Uniform Transfer on Death Securities Registration Act, owners may name beneficiaries for their stocks, bonds, and brokerage accounts. The process for distributing assets is similar to allocating a payable-on-death bank account.
The investors take ownership when the account owner registers with a stockbroker or bank. They then identify beneficiaries and percentage allocations on the broker or bank’s beneficiary form.
When setting up an account, owners my use a beneficiary form identifying who receives their account assets after they die and the percentages for each transfer. Account owners can also update beneficiary forms.
If the account owner is married, its assets will usually go to their spouse even if there are other named beneficiaries depending on the state’s law. If the account owner is unmarried, the assets will be transferred automatically to the named beneficiaries after the appropriate paperwork is filed.
Most times, a new account is set up for the beneficiary and the deceased individuals securities are transferred into it. Activities such as purchasing, selling, or account transfers to another firm are not permitted until the account is open and legal authority is established.
Beneficiaries need to complete an application and submit required personal information. Brokers use this information to learn about the beneficiary, meet their needs and comply with legal requirements.
Attorneys can present options on transferring assets and other estate matters. They may also prepare documents that meet these needs and comply with Florida’s legal requirements.