Transfer on Death (TOD) and Payable on Death (POD) Designations to Skip Probate
What Is It?
Probate is the court-supervised process of distributing a deceased person’s assets, and it’s expensive, slow, and public. Attorney fees alone can be 2-5% of the estate’s value, the process takes 6-18 months on average, and the entire filing becomes a public record. However, assets with a Transfer on Death (TOD) or Payable on Death (POD) designation bypass probate entirely — they transfer directly to the named beneficiary upon the owner’s death, outside of the will and outside of court.
This is one of the simplest and most underused estate planning tools available.
How It Works
- POD for bank accounts. Contact your bank and ask to add a Payable on Death beneficiary to your checking, savings, or CD accounts. This is a simple form — no attorney needed. The beneficiary has no access to the account while you’re alive but receives the funds directly upon your death.
- TOD for investment accounts. Brokerage accounts, stocks, and bonds can be registered with a Transfer on Death beneficiary. Contact your brokerage to add this designation.
- TOD for real estate (where available). Many states now allow a Transfer on Death Deed (also called a beneficiary deed) for real property. You record a deed that names a beneficiary, but you retain full ownership and control during your lifetime. Upon death, the property transfers without probate.
- TOD for vehicles (in some states). A growing number of states allow TOD designations on vehicle titles.
What Most People Don’t Know
- TOD/POD overrides your will. If your will says your bank account goes to Person A, but the POD beneficiary on the account is Person B, Person B gets the money. This is a critical detail — and a common source of unintended outcomes when beneficiary designations aren’t kept up to date.
- There’s no cost to set this up. Banks and brokerages add POD/TOD designations for free. Real estate TOD deeds have a small recording fee (typically $10-$50).
- The beneficiary gets the account without waiting for probate. They simply present a death certificate to the bank or brokerage, and the funds are released — often within days.
- It’s revocable at any time. You can change or remove the beneficiary designation whenever you want during your lifetime, with no tax consequences.
- Real estate TOD deeds are available in most states. As of 2024, over 30 states have adopted the Uniform Real Property Transfer on Death Act or similar legislation. Notable holdouts include New York, Florida, and Texas (for now).
- It keeps your assets out of the public record. Unlike a will (which is filed with the court and becomes public), TOD/POD transfers are private.
Who Benefits Most?
Anyone who wants to avoid probate costs and delays, especially people with straightforward estate plans (e.g., everything goes to a spouse or children). It’s also valuable for single-asset situations — like a parent who wants a house to pass directly to a child without court involvement.
Legal Basis
- Uniform TOD Security Registration Act — Adopted in all 50 states and D.C., this uniform law allows TOD registration for securities (brokerage accounts, stocks, bonds).
- Uniform Real Property Transfer on Death Act (URPTODA) — A model act adopted in over 30 states allowing TOD deeds for real estate. Check your state’s adoption status.
- 12 CFR § 330.10 — FDIC regulations recognizing POD (also called “testamentary” or “trust”) accounts for deposit insurance purposes.
- State-specific statutes vary. Examples:
- California: Cal. Prob. Code § 5600 et seq. (revocable transfer on death deed)
- Ohio: ORC § 5302.22 (transfer on death designation affidavit)
- Colorado: CRS § 15-15-401 et seq. (Uniform Real Property Transfer on Death Act)