Transfer on Death (TOD)
Questions
• What is a TOD?
• What are some advantages of passing assets through a TOD?
• What are some disadvantages of passing assets through a TOD?
• Who can be the beneficiaries of a TOD account?
• What are some considerations with a TOD?
• What is the transfer process for beneficiaries?
What is a TOD?
Transfer on Death (TOD) is a legal agreement that allows assets held in an Edward Jones account to bypass probate and be transferred to named beneficiaries at the time of the account owner’s death. In addition to avoiding the time delays, costs and publicity typically associated with probate, TOD can help simplify an estate by allowing assets to be transferred in a quick and efficient manner as specifically directed by the account owner.
TOD is available to holders of Edward Jones individual accounts in all states except Louisiana.
What are some advantages of passing assets through a TOD?
Advantages of passing assets through a TOD contract include:
• TOD is easy to establish and allows the account owner to maintain control of the assets until death.
• TOD can be established on an Edward Jones account by simply signing a designation form that the Edward Jones financial Representative can provide to customers.
• Transfers assets in kind.
• Allows one to name contingent beneficiaries.
• Avoids probate.
• Minimizes publicity.
What are some disadvantages of a TOD?
Disadvantages of passing assets through a TOD contract include:
• Only covers assets in an Edward Jones account. TOD is not a comprehensive estate planning tool. The TOD designation does not control distribution of any assets held outside the Edward Jones account.
• TOD does not address incapacity. One may want to consider another type of estate planning vehicle, such as a trust, to govern distribution of other assets and to address incapacity.
• TOD is designed primarily for nontaxable estates with minimum planning needs. If estate taxes are due, beneficiaries may be liable for them.
Who can be the beneficiaries of a TOD account?
Beneficiaries can be relatives, friends, a charity or trust, as long as they are a citizen of the United States, United Kingdom, or Canada or a lawful permanent resident of the United States.
What are some considerations with a TOD?
A TOD may not be appropriate when an owner may have federal estate tax concerns or complicated estate planning wishes. A TOD does not replace a will, and only covers certain securities held in an Edward Jones account. Finally, a TOD has no affect on the tax liability associated with an estate.
What is the transfer process for beneficiaries?
In order to begin the transfer of assets, one of the beneficiaries should contact his or her local Edward Jones financial advisor. He or she will assist the heirs with gathering the required documents and opening accounts for the transferring of assets as specified in the TOD agreement.