An estate that is very complex can take as long as two years to probate, but even smaller estates will require at least six months to complete the process. It is also expensive, and Americans pay an average of about $2 billion in probate costs every year. Estate planning makes it possible for you to save your family members from the headache that probate has become as well as the expense.
An Introduction to the TOD Account
A transfer on death account, or a TOD account, is one that will transfer the assets contained therein to the designated beneficiaries upon the death of the owner of the account. This doesn’t require that the beneficiaries wait for the probate process to end. If you have a bank account that you would like to leave to a relative, making the person the beneficiary of your TOD account will be sufficient.
Other Types of TOD Accounts
There are other types of TOD accounts–not just bank accounts. You can arrange a transfer on death status for most assets. Here are some other common TOD accounts.
Transfer on Death Deeds
Real estate can be transferred to your beneficiaries with transfer on death deeds. It depends on the state, but you may be able to create a deed that will take effect in the event of your passing. A signed and notarized copy must be recorded with the county, and if you need to do so, you may revoke this deed.
Transfer on Death Registrations
You can do the same thing with your vehicles as well. A transfer on death registration for vehicles allows you to name a beneficiary for your vehicles. You may continue to do whatever you like with the car, such as sell it, give it away, or choose another beneficiary.
Transfer on Death Securities Registration
In most states, you can designate a beneficiary to inherit your brokerage accounts or any stocks or bonds that you own. You can do this when you register your ownership of the account. That’s when you will ask to transfer ownership in what is known as a “beneficiary form.” You will receive papers that will state that you are the owner of the account, and the name of your beneficiary will also be on the document.
Like with the other types of TOD products, beneficiaries don’t have any rights to the property while you are alive. Upon your passing, however, the property will transfer to your beneficiary without the burden of probate.
Retirement Accounts
You have the opportunity to name a beneficiary when you open a 401(k) or an IRA. These funds contained in these accounts will not need to go through the probate process after you pass away.
The Beneficiaries
You are in complete control of naming beneficiaries to your accounts. If you would like to replace one beneficiary with another, you can do so. However, you must be deemed mentally competent before you can make changes.
Is it Better to Have a TOD Account or a Will?
The answer to this question depends on each person’s unique financial situation. Whatever you decide, it is better to hire an estate planning lawyer to draw up a TOD account or a will than to not have either of these in place when you pass away. Estate planning is instrumental in reducing legal machinations, and if you choose to focus on TOD accounts, you will simplify the process even further.
This doesn’t mean that you don’t need to have a will. Your will comes into play when the assets you bequeath to your beneficiaries are to be distributed, but this can occur much sooner if you have TOD accounts. If you don’t have a will, the state law of intestacy will govern who receives them.
The process for TOD accounts will be much simpler. After you pass away, all the executor needs to do is send your death certificate to the brokerage firm, for example, and the firm will re-register the property in the beneficiary’s name.
If you wish to make end-of-life preparations, you will want to have an experienced estate planning lawyer. Contact the Knee Law Firm today at (201) 996-1200 in Hackensack, New Jersey to schedule an initial consultation.