Are you seeking an easy way to pass on investments to your survivors that allows them to skip probate? If so, you should consider creating transfer on death, or TOD, accounts for some of your investments. The state of New York recognizes this provision for various types of accounts that will allow your survivors immediate access to your funds after your passing.
What kind of assets can go into TOD accounts?
TOD accounts are a useful estate planning tool because the assets located in them go directly to your designated beneficiaries as soon as your death certificate is produced. You can set up investment accounts like mutual funds, stocks, bonds and other assets held in a brokerage account to become a TOD simply by filling out a TOD beneficiary form. Although some states allow the same benefit for real estate, New York does not.
Benefits of TOD accounts
The biggest benefit of TOD accounts is the ability to bypass probate, so your beneficiaries can get the assets sooner. Married couples often set up joint TOD accounts with the surviving spouse getting the funds initially. You should coordinate with the executor of your estate as to which investment accounts have TOD status.
Review TOD status frequently
As part of the estate planning process, you should review your TOD accounts frequently as the status of your beneficiaries may change through disinheritance or other circumstances. TOD accounts pass directly to the person named on the form as they override any wills that you may have. Additionally, leaving TOD accounts to grandchildren can become complicated if the children are still minors at the time of your passing.
Working with an experienced estate attorney may help you decide which assets can go into a TOD account to help avoid probate. An attorney may also help you revise your will to reflect these accounts.