Transfer on Death (TOD) Registration By Tish Michelson

The Uniform TOD Security Registration Act provides non-probate transfers of specifically registered investment securities from owner to named beneficiaries at the owner’s death. The letters T.O.D. stand for “transfer on death” signaling that the investment or account is to be re-registered on request after the owner’s death in the name of the beneficiary.

State law, rather than federal law, governs the way securities may be registered in the names of their owners. Most states (48 out of 50) and the District of Columbia and US Virgin Islands, have adopted the Uniform TOD Security Registration Act, although some have modified it. In addition, brokerage firms may decide whether or not to offer TOD registration.

Transfer on Death (TOD) registration allows you to pass the securities you own directly to another person or entity (the “TOD beneficiary”) upon your death without having to go through probate. By setting up your account or having your securities registered this way, the executor or administrator of your estate will not have to take any action to ensure that your securities transfer to whomever you have designated. The TOD beneficiary will have to re-register the security or account in their own name once the owner has died. The re-registration typically involves sending a copy of the death certificate and completing an application.

The TOD registration enables avoidance of probate without the risk of problems caused by joint and survivor security titles. Control of an investment registered in TOD beneficiary form, including the right to change or cancel the death beneficiary, lies solely with the owner.