Transfer on Death (TOD) and Pay on Death (POD)

Transfer-on-death (TOD) and pay-on-death (POD) designations allow account holders to name beneficiaries who receive assets directly at death, bypassing probate.

Think of it this way: A TOD or POD designation is like a sticky note on your account that says "give this to [name] when I die." The court never gets involved. The assets go straight to the named person.

Transfer on Death (TOD)

• Purpose: Transfer securities directly to named beneficiaries at death
• Probate: Avoided; assets transfer directly to the named beneficiary
• Available for: Individual and some joint accounts
• Revocable: Yes (account owner can change or revoke the designation at any time)
• No effect during lifetime: Beneficiary has no rights to the account while the owner is alive
• Does not affect ownership during lifetime: The owner can buy, sell, and withdraw freely
• Overrides a will: TOD designation takes priority over any contrary instructions in a will

Exam Tip: Gotchas

• TOD overrides a will. If a will says "leave my brokerage to my sister" but the TOD names a brother, the brother receives the assets. The TOD designation controls.
• Beneficiary designations take precedence over testamentary documents. TOD/POD designations override a will in all cases.

Pay on Death (POD)

• Bank equivalent of TOD: Used for bank accounts (checking, savings, CDs)
• Same probate avoidance: Assets pass directly to the named beneficiary
• Revocable: Yes

TOD vs. POD Comparison