Anyone that’s gone through the probate process knows that it can be both time-consuming and expensive. While the probate process is a necessary step for handling a will in the state of Florida after a person’s passing, it’s not always a necessity depending on the type of estate plan that you set up. Transfer on death accounts are one great tool that can help your loved ones avoid the probate process after your passing.
What is a TOD account?
A transfer on death account, known as a TOD account for short, is an estate planning tool that your lawyer may recommend for some of your accounts. With this type of account, you can list beneficiaries who are to receive your ownership of the asset upon your death. TOD accounts can list one or many beneficiaries. When they list more than one, they’re considered joint TOD accounts. Upon your passing, your interest in a TOD account will be split up evenly between your named beneficiaries.
How does this avoid probate?
A TOD account actually bypasses the probate process and allows a direct transfer of the asset to your listed beneficiary or beneficiaries. This type of account overrides anything that you had stated in a last will and testament or a revocable living trust. Traditionally, your beneficiary would have to provide the establishment holding the account with an original death certificate. Then, the transfer of the asset will happen.
One thing you can do during the estate planning process to keep things simple for your loved ones is to create transfer on death accounts. These accounts allow your loved ones to avoid the probate process and gain ownership of your assets directly upon your death. You should consult an attorney to determine what types of accounts are eligible for transfer on death accounts.