Transfer on death and payable on death designation
Key takeaway
A transfer on death (TOD) or payable on death (POD) designation names a beneficiary to receive specified property at death, subject to the applicable state law and account, securities registration or deed requirements.
The joint ownership and transfer on death guide covers ownership arrangements and beneficiary designations. The examples below address securities, bank accounts and real estate separately.
How it works
Securities: eligibility and lifetime control
In Minnesota, for example, securities registration in beneficiary form is available only to individuals whose registration shows sole ownership or multiple ownership with a right of survivorship, rather than ownership as tenants in common, and a registering entity need not offer or accept beneficiary registration. Other states differ.
In Minnesota, for example, naming a TOD beneficiary on a securities registration has no effect on ownership during the owner's lifetime, and the sole owner or all then surviving owners may cancel or change the registration at any time without the beneficiary's consent. Other states differ.
In Minnesota, for example, a security registered in beneficiary form may be reregistered to beneficiaries who survive all owners after proof of all owners' deaths and compliance with the registering entity's applicable requirements. Multiple surviving beneficiaries hold their interests as tenants in common until division, and if no beneficiary survives all owners, the security belongs to the deceased sole owner's estate or the last surviving owner's estate. Other states differ.
Bank accounts: surviving POD payees
In Minnesota, for example, remaining POD account funds belong to surviving POD payees when the original party, or the last surviving original party, dies. If multiple payees survive that party, later survivorship among those payees exists only if the account or deposit agreement expressly provides for it. Other states differ.
Real estate: when does a Minnesota TOD deed take effect?
In Minnesota, for example, a TOD deed transfers the described real property interest at the specified grantor owner's death only if the deed expressly states that it is effective only on that death, complies with applicable Minnesota deed law, satisfies the statutory survival requirements and is recorded before that death in a county containing at least part of the property. Before the deed becomes effective, it has no effect on title, although it creates an insurable interest for the designated beneficiaries against loss or damage occurring on or after effectiveness. For registered property, an incorrectly or incompletely recorded deed is valid if recorded before the grantor owner's death in the county recorder's or registrar of titles' office in a county containing at least part of the property and memorialized on the certificate of title after death. Effectiveness under the statute's listed recording provisions still requires proper recording in a county containing the property. Other states differ.
Real estate: an Ohio affidavit example
In Ohio, a TOD designation affidavit must be verified before a person authorized to administer oaths and recorded before the executing individual's death with the recorder of the county containing the real estate. Consideration and delivery to beneficiaries are unnecessary, but recording alone does not replace the affidavit's statutory contents and execution requirements. Other states differ.
In Ohio, for compliance with the statute's beneficiary existence requirement, a successor trustee is treated as the TOD or contingent TOD beneficiary in existence at the owner's death when the named natural or legal person was designated solely as trustee and had died, resigned or otherwise been replaced by that time. The successor trustee need not be named in the affidavit for that purpose. Other states differ.
Real estate and estate shares
Real estate: beneficiary participation
In Minnesota, for example, a TOD deed beneficiary need not sign, consent, receive notice or receive delivery of the deed during the grantor owner's lifetime, but that rule concerns beneficiary participation rather than the owner's deed formalities. The deed may name the trustee of an inter vivos trust, including a revocable trust, the trustee of a testamentary trust or another entity legally qualified to hold Minnesota real estate. Other states differ.
Use the wills and probate records and questions checklist to organize records and questions about beneficiary designations and estate planning documents.
Estate shares: an Oregon advancement example
In Oregon, a nonprobate transfer intended by the decedent to take effect at death counts as an advancement against an heir's estate share or a devisee's gift under the will if the decedent declares it in writing, or the heir or devisee acknowledges it in writing, as an advancement. Beneficiary designations, survivorship and TOD deeds or designations are statutory examples in this advancement context, rather than a universal statement of eligibility for TOD transfers. The transferred property is valued at the decedent's death unless the will or the decedent's writing directs otherwise. Other states differ.
Points that are easy to confuse
TOD and POD: the labels can overlap
In Minnesota, for example, securities beneficiary registration may use either “transfer on death” or “TOD,” or “pay on death” or “POD,” after the registered owner's name and before the beneficiary's name. POD is therefore not exclusively a bank account label under that statute. Other states differ.
Wills: account rules require an answer specific to the state
In Minnesota, for example, a will may change POD account survivorship rights by specifically referring to the account, but the will's terms do not bind the financial institution unless it receives written notice of a claim under the will. After that notice, the deposit remains undisbursed until a probate court order adjudicates the decedent's interest disposable by will. Other states differ.
Accounts with multiple parties: a designation can be ineffective
In Arizona, a POD designation on an account with multiple parties and without survivorship rights is ineffective, and a tenancy in common designation establishes the absence of survivorship. The deceased party's beneficial interest passes as part of the estate. Other states differ.
Louisiana bank payments: other claims remain available
In Louisiana, the statutory bank account payment provisions apply despite a beneficiary designation in a will when the depositor's signed account arrangement expresses the intention to pay at death, the beneficiaries are specifically named in bank records, and the account title uses “in trust for,” “as trustee for” or “payable on death to” those beneficiaries. The bank may disburse upon receiving a death certificate, but forced heirship rights and collection or collation claims of spouses, heirs, legatees, creditors and other entitled persons remain available. Other states differ.
Common questions
Can a will alter a payable on death designation in Rhode Island?
No, a will cannot alter POD or statutory or account survivorship rights in Rhode Island for accounts within the statute's scope. That statute applies to accounts in the state but excludes accounts established for a partnership, joint venture or other organization for a business purpose, accounts controlled by agents or trustees for a corporation, unincorporated association or charitable or civic organization, and fiduciary or trust relationships established outside the account terms. Rights are determined by the account terms at death, and a party may change those terms through signed notice received by the financial institution during that party's lifetime. A later will is not that notice to change the account. Other states differ.
When does a Kansas payable on death beneficiary's interest vest?
In Kansas, a POD beneficiary's interest does not vest during the owner's lifetime and vests at death subject to the specified medical assistance and surviving spouse elective share claims when the bank receives the relevant written notice before the owner's death or before payment to the beneficiary. A medical assistance notice requires payment to the department for children and families only to the extent of medical assistance expended on the deceased owner, with any remaining balance going to the beneficiary. Notice of the surviving spouse's intent to claim an elective share requires payment to the court having jurisdiction to the extent of that elective share, with any remaining balance going to the beneficiary. During life, the owner may withdraw funds in whole or in part under the contract as though no beneficiary were named and may change the beneficiary, but a change must follow the bank's prescribed form and manner and reach the bank before the owner's death. Other states differ.
Can a will revoke a Minnesota TOD deed?
No, in Minnesota, for example, a will does not revoke a TOD deed executed, acknowledged and recorded in accordance with the statute. The owner, or any one of multiple grantor owners, may instead revoke the entire deed by recording a revocation before the revoking owner's death in a county containing at least part of the property. For registered property, an incorrectly or incompletely recorded revocation is effective if recorded before that owner's death in the county recorder's or registrar of titles' office in a county containing at least part of the property and memorialized on the certificate of title after death. Effectiveness for the statute's listed recording provisions still requires proper recording in a county containing the property. Other states differ.
Does a Minnesota TOD deed remove existing claims against the property?
No, in Minnesota, for example, a TOD deed transfer remains subject to effective conveyances, assignments, contracts, mortgages, deeds of trust, liens, security pledges, judgments, tax liens and other matters or encumbrances affecting the interest at the triggering owner's death, including a surviving spouse's claim when that spouse did not join in executing or consent in writing to the deed. The specified state or county public assistance claims apply when other estate assets are insufficient, and the beneficiary's liability to account for the unpaid claim is limited to the transferred interest's value. The beneficiary must record the required clearance certificate in every county containing the property, and recording a certificate does not eliminate a claim or lien that the certificate continues. Other states differ.