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Securities and more with TOD designations avoid probate

Probate can be a lengthy process, but certain assets can pass directly to your beneficiaries without having to go through this legal action.

For example, if you own stocks, bonds or mutual fund shares, you can use the transfer on death, or TOD, registration and designate whomever you wish to inherit these securities when you pass away.

How the transfer works

When you register as the owner of a certain security, you would take ownership in "beneficiary form." The documents issued to you would bear your name as the owner of the security along with the name of your beneficiary. Under the Uniform TOD Security Registration Act of 1989, your investment can be re-registered following your death per the request of the named beneficiary. This simple procedure occurs outside of probate and contains no reference to your will.

TOD vehicle registration

In addition to transferring securities, the state of Arizona allows you to pass along ownership of your vehicle by naming a beneficiary on your registration certificate. The beneficiary would not have any rights to your car or truck during your lifetime, but upon your death, he or she only needs to present a copy of the death certificate and the vehicle will be retitled legally.

Failing to update

Securities and vehicles are only two examples of assets that can bear the TOD designation. Others include your checking and savings accounts, retirement accounts, annuities and life insurance policies. You may have several different assets that fall into this category, and it would not be surprising to find that you had made certain beneficiary designations years or decades ago that still exist. However, circumstances change, and an estate planning attorney will tell you that failing to update beneficiary names could have unexpected consequences. For instance, if you do not change your TOD designations, securities you have owned for years might go to an ex-spouse instead of to your current spouse. Reviewing your estate plan on a regular basis can help you avoid making simple errors that could adversely affect the smooth transfer of assets to those you love.

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ANDERSEN PLLC
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Scottsdale, AZ 85255

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