What Assets Can Use TOD Designations?
TOD works on more than just bank accounts. Here's the complete breakdown of which assets can use a Transfer on Death designation — and which ones can't.
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Transfer on Death (TOD) designations can be used on brokerage and investment accounts, stocks and bonds, savings bonds, and real estate in states that allow TOD deeds. Bank accounts use the equivalent POD (Payable on Death) designation. Retirement accounts use their own beneficiary designation system. Vehicles, business interests, and personal property generally cannot use TOD — they require other planning tools.
Assets That Can Use TOD Designations
Brokerage Accounts
Non-retirement investment accounts at brokerages like Fidelity, Schwab, or Vanguard. TOD is added directly through the institution — free, simple form.
Individual Stocks & Bonds
Individually held securities registered in your name can have a TOD registration added through the transfer agent or brokerage holding them.
U.S. Savings Bonds
Series EE and I bonds can have a TOD beneficiary registered. Electronic bonds through TreasuryDirect allow online beneficiary designation.
Real Estate (TOD Deed)
Available in 30+ states including Arizona and California. A Transfer on Death Deed records a beneficiary for real property — transferring ownership at death without probate.
Bank Accounts
Checking, savings, money market, and CDs use POD (Payable on Death) — functionally identical to TOD. Add at your bank with a simple form.
Retirement Accounts
IRAs, 401(k)s, and 403(b)s use their own beneficiary designation system — not technically called TOD but functionally the same. Must be designated directly with the account custodian.
Life Insurance
Life insurance uses a beneficiary designation system separate from TOD. Name beneficiaries directly on the policy — primary and contingent.
Annuities
Annuities have their own beneficiary designation — name beneficiaries directly on the contract. Death benefit passes outside probate to the named beneficiary.
Assets That Cannot Use TOD Designations
Real Estate (Non-TOD States)
In states without TOD deed legislation, real estate must be placed in a trust or held jointly to avoid probate. A will alone requires probate for real property.
Vehicles (Most States)
Most states do not allow TOD registration for vehicles. Some states offer transfer-on-death titles — check your state's DMV. Otherwise, vehicles go through probate or need trust ownership.
Business Interests
LLC membership interests, corporate shares, and partnership interests cannot use TOD. These must be assigned to a trust or addressed through a buy-sell agreement.
Personal Property
Jewelry, art, furniture, and collectibles have no TOD mechanism. Address through a trust, a specific bequest in a will, or a general assignment to the trust.
Even with TOD designations on every financial account, you may still face probate for real estate (in non-TOD states), vehicles, business interests, and personal property. A revocable living trust is the only tool that covers all asset types under one coordinated plan.
TOD Deeds for Real Estate — State by State
The Transfer on Death Deed is one of the most powerful probate-avoidance tools available for real estate — where it exists. Here's what you need to know:
- Available in 30+ states including Arizona, California, Colorado, Nevada, Texas, and others. Check your state's current law — availability has expanded significantly over the past decade.
- How it works: You record a TOD deed with your county recorder's office naming a beneficiary. At your death, the beneficiary records an affidavit of survivorship and the property transfers directly — no probate, no court.
- During your lifetime: You retain full ownership and can sell, refinance, or revoke the deed at any time. The beneficiary has zero rights until your death.
- Capital gains advantage: Unlike adding a joint owner, a TOD deed preserves the full stepped-up basis for the beneficiary at death — potentially saving tens of thousands in capital gains tax.
- Limitation: A TOD deed provides no incapacity protection. If you become unable to manage the property during your lifetime, a trust or power of attorney is still needed.
Arizona is a TOD deed state. For YWait clients in Arizona, a TOD deed can be a useful tool — particularly for straightforward situations. For complex estates, multiple beneficiaries, or situations requiring incapacity protection, a revocable living trust is more comprehensive.
How TOD Fits Into a Complete Estate Plan
TOD designations work best as part of a coordinated strategy — not as a standalone plan. Here's how they integrate with a complete estate plan:
Holds real estate, business interests, and any accounts that benefit from full trust coordination and incapacity protection. The foundation of the plan.
For accounts that aren't retitled into the trust, TOD/POD designations provide probate-free transfer. Name the trust as contingent beneficiary as a safety net.
Spouse as primary for rollover benefits; trust or children as contingent — coordinated with the trust's distribution strategy.
Named directly to spouse, children, or trust — depending on your distribution goals and whether you need the trust's control provisions to apply to the proceeds.
Catches any assets that fall outside the trust and TOD/POD designations — directing them into the trust through a brief probate proceeding.
Common Mistakes
- Assuming TOD covers everything. TOD covers specific financial accounts and real estate in TOD deed states. It doesn't cover vehicles, business interests, personal property, or assets in states without TOD deed laws.
- Never checking which accounts have TOD designations. Many people have accounts with no designation at all — silently waiting to go through probate. Audit every account annually.
- Misaligning TOD designations with the trust. If your trust distributes equally but your brokerage TOD names only one child, that child gets everything from that account. Coordinate all designations with your trust's intent.
- Using a TOD deed without understanding state-specific requirements. TOD deed laws vary by state — recording requirements, revocation procedures, and limitations differ. An improperly executed TOD deed may be invalid.
- Naming a minor directly on any TOD-designated account. Minors cannot receive a direct transfer. Name a trust as beneficiary whenever minor children are involved.
Real-Life Example
Dennis had a revocable living trust for his home and primary bank account. He also had three brokerage accounts totaling $280,000 that he'd never retitled into the trust or added TOD designations to.
When Dennis passed away, his successor trustee handled the home and bank account smoothly — no probate, completed in six weeks.
The three brokerage accounts — with no TOD designations and not titled in the trust — went through probate. The process took 11 months and cost $18,400 in fees.
Three simple TOD designation forms — available free through each brokerage's website — would have kept all $280,000 out of court. Dennis had the trust. He just never coordinated the accounts with it.
The trust did its job perfectly. The undesignated accounts created a probate that the trust was supposed to prevent.
The YWait Perspective
TOD designations are one of the simplest and most underused probate-avoidance tools available — free, fast, and effective for the accounts they cover. The challenge is knowing which assets can use them, which can't, and how to coordinate them with your overall plan.
At YWait, we map every asset in a client's estate and make sure every single one has a clear, probate-free path — through the trust, through TOD/POD designations, or through beneficiary coordination. No gaps. No surprises.
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