Transfer on Death Accounts (TOD)

Written by True Tamplin, BSc, CEPF® | Reviewed by Editorial Team

Updated on January 04, 2023

A transfer on death account (TOD) is an account that transfers ownership upon the original owner's death and does not require any action on the part of inheritors.

You can still maintain full control over the funds, but it is an easier way for heirs or estate administrators to claim the money since they do not have to go through probate court proceedings.

Typically, these accounts are set up as part of a revocable living trust or estate plan, though they can be used for investment purposes (i.e., stocks and bonds) as well.

For example, when you buy a TOD account instrument such as stock or bond, the transfer passes to your chosen beneficiary at your death.

How Do Transfer on Death Accounts Work?

There are two types of transfer on death accounts: transfer on death at the account level or transfer on death at the asset level.

Account transfer on death registers the account to your beneficiaries when you die.

As an example, transfer on death accounts transfer the actual account to the beneficiary, not transfer rights to cash or securities in the account.

Asset transfer on death registers the transfer of specific assets to your beneficiaries when you die.

As an example, if you transfer on death stock certificates, it will transfer ownership of those stocks to your beneficiary without any action required by you or your administrator.

Benefits of Having a Transfer on Death Account

There are quite a few benefits to transfer on death accounts:


Ease of Transfer

The transfer of the account upon death is simple, as it requires no transfer paperwork to be filed with any government or agency.

No Probate

There is no need to go through probate court proceedings, which can save time and avoid delays in inheriting your assets.


You have complete control of transfer on death accounts so your heirs will not be aware of their existence unless you tell them.

Protecting Minors

Transfer on death accounts are a good way to transfer funds or property to minors because they take effect after your death. This is a legal transfer that does not require court approval or the consent of a parent.

Protection From Creditors

This kind of account is not accessible by creditors. Holding property as transfer on death effectively places the assets beyond the reach of judgment creditors and other claimants such as bankruptcy trustees, spouses, and children.

Who Can Open a Transfer on Death Account?

Typically, transfer on death accounts are only set up for legal adult individuals. You can have this account as either an individual or as part of a revocable living trust.

In most cases, this type of account must be managed by an attorney or agent who has been authorized to manage the assets in your transfer account.

For minors, they may have TOD accounts, but transfer may be subject to certain restrictions.

For example, accounts that transfer to minors may require an accounting of the assets for tax purposes after transfer, which is usually only available to legal adults.

How to Set Up and Manage Transfer on Death Accounts?

You can generally set up a transfer on death account with your financial institution, broker or transfer agent.

Usually, you will need the following information:

  • Account number (if transferring securities)
  • Trust name or legal relationship designation of person who has rights to transfer on death
  • Name of transfer on death beneficiary
  • Signature and title

Typically, you will submit transfer on death forms to transfer or re-register your assets under transfer on death rules.

You can also transfer assets into your account without having to liquidate them first.

However, some assets may need extra documentation before they can be transferred to the beneficiary (e.g., transfer on death joint tenancy bank or brokerage accounts).

Importance of Naming Beneficiaries

The transfer of assets to beneficiaries upon your death can be accomplished through transfer on death accounts.

For transfer on death accounts, you must name a beneficiary for the money or property in transfer form so that it will pass directly to them when you die.

You may also add secondary beneficiaries, if desired. You should include instructions with your will, trust or revocable living trust to avoid any confusion after you die.

Who Can Be Named as the Beneficiary for Your Estate or Trust?

For transfer on death accounts, you name a beneficiary and this person automatically receives all rights and interest in the account when you die.

This person can be any individual who is eligible to inherit, including family members, friends or anyone who would be an appropriate beneficiary for your estate.

The beneficiary is the only person who can receive assets in transfer on death accounts.

Furthermore, the beneficiary typically does not need to take any action after your death to transfer assets and they don't have to file a claim against your estate for the transfer.

Final Thoughts

Transfer on death accounts transfer all interest in property or assets to a beneficiary upon your death.

This type of account is typically set up with financial institutions, brokerages and transfer agents.

You can transfer any type of asset into the account and continue managing it until you die when it automatically transfers to the beneficiary in transfer on death form.


Transfer on Death Accounts (TOD) FAQs

What is a transfer on death account?

Transfer on death accounts are assets that transfer to beneficiaries automatically upon the death of the owner.

Who can open a transfer on death accounts?

Typically, transfer on death accounts are only set up for legal adults.

How are transfer on death accounts set up?

TOD accounts are either established with financial institutions, transfer agents or brokerage companies. You can open this type of account with an agent in your area to receive transfer forms when you die.

How do transfer on death accounts work?

Transfer on death accounts are assets that transfer directly to a beneficiary when the account owner dies. In transfer on death form, you transfer all rights to property or assets to a beneficiary, who is automatically entitled to the transfer of money or other items from the account.

Who can be named as transfer on death beneficiaries?

Transfer on death accounts are set up for individuals who can inherit in transfer form. This includes immediate family members or any other individual that would be an appropriate beneficiary for your estate.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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