Define: TOD

TOD, which stands for Transfer-on-death, refers to the process of property transfer without probate when the owner passes away. This is typically achieved through a specific document known as a TOD deed. The designated beneficiary, whether an individual or an organisation, receives the property upon the owner’s death. Multiple beneficiaries can be named, and the transfer only occurs after the owner’s demise. In certain states, TOD can also be used for transferring stocks, bonds, vehicles, and real estate.

TOD (Transfer-on-death) is a legal arrangement that allows property owners to designate beneficiaries who will receive their assets after they pass away, bypassing the probate process. This can be achieved through a TOD deed, which applies to various assets such as real estate, securities, and brokerage accounts. Beneficiaries can be individuals or organisations, and backup beneficiaries can also be named. However, beneficiaries cannot access the assets until the property owner’s death. For instance, John wants his daughter, Sarah, to inherit his house, so he creates a TOD deed naming her as the beneficiary. When John passes away, the house automatically transfers to Sarah without probate. Similarly, Mary designates her son, Tom, as the TOD beneficiary for her brokerage account. Upon Mary’s death, the account transfers to Tom without probate. These examples demonstrate how TOD simplifies asset transfer after death, ensuring that intended recipients receive their inheritance without the need for a lengthy and costly probate process.

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This glossary post was last updated: 17th April 2024.