TOD accounts

[curb1]

What is the name of your state (only U.S. law)? Oregon

In a very simple situation, what might be the disadvantages of having a TOD (Transfer on Death) account set up instead of putting bank accounts and brokerage accounts in a revocable trust?

By simple I mean a brokerage account having three equal beneficiaries and zero friction between beneficiaries. The more I think about this, the more advantages I see without a downside. Any comments?What is the name of your state (only U.S. law)?

 

[tranquility]

The only problems I can see offhand is that:

1. You have to keep your estate plan up-to-date or the inheritance may skew "unfairly" (not the way you want) if you don't keep track of the beneficiaries and amounts in the accounts and other assets.

2. If you have a special needs person (However you define it.) you have no control over what they do with the money and a trust may be a better instrument to make sure they get benefit of the inheritance.

 

[curb1]

Thank you,

It is interesting. I just spoke with a friend at a large financial institution and the question caught him off guard. He said, "we always have people coming in to place accounts into a revocable trust", but he couldn't remember someone taking the account out of the trust and putting it into a TOD account.

The more I have thought about it, I can't find any reason not to handle a simple situation in that manner (TOD) for liquid accounts and no extraneous problems.

 

[anteater]

I'll add a few thoughts...

1) A trust usually provides for incapacity. You will have to have your powers of attorney in place.

2) Along the same lines as Tranq... People tend to forget about TOD registrations while they usually don't forget creating and funding a trust. Be sure that you understand what happens with the TOD accounts if one or several of the designated bennies predeceases you and you forget that you have established the TOD.

 

[curb1]

Thank you...

1) the powers of attorney are important for this.

2) We will have everyone involved fully aware of this and your precautions. The Schwab Account "Designated Beneficiary Plan" covers the variables very well for our situation.