Avoid Probate with a Transfer on Death Agreement
U.S. residents with retail investment accounts at Raymond James (USA) Ltd. (RJLU) can name beneficiaries to inherit their accounts with a transfer on death agreement (TOD). Adding a TOD is similar to naming beneficiaries for individual retirement accounts and qualified employer plans. A TOD agreement will help your heirs avoid the burdens of probating the account in state court1 after your passing.
Why should I designate a TOD beneficiary?
While alive, you retain total control over the investment account assets. With a TOD on the account, ownership of the account will be passed to your named beneficiaries after you die. The account does not form part of your estate, which allows it to avoid public probate proceedings and probate fees. Your beneficiaries will inherit the account much faster than an account that flows through an estate while maintaining privacy about the inheritance. Note that a TOD supersedes a will or trust for the specific accounts with a TOD agreement. It is important to take into consideration of all your testamentary instruments to ensure your estate plan fulfills your overall intentions.
Who can I name as a TOD beneficiary?
You can name your spouse, children, relatives, friends, charities, businesses, and trusts as beneficiaries. Married individuals may have joint accounts and can also add TOD beneficiaries who will inherit the account upon the death of the last surviving spouse. You can name multiple TOD beneficiaries and specify the percentage or per stirpes allocation to each beneficiary. It is also wise to name contingent beneficiaries in case the original beneficiaries pre-decease you. If your wishes change, you may change beneficiaries or revoke your TOD when needed, provided you have the mental capacity at that time.
You may name beneficiaries located outside of the United States. However, note that we may require the account to be moved out of RJLU to another institution to meet securities regulations. Example: you live in the U.S. and you name a beneficiary who lives in Canada. The Canadian beneficiary can inherit your account, but RJLU will restrict trading until the assets move to our Canadian institution, Raymond James Ltd. The beneficiary can maintain your same Raymond James financial advisor in Canada.
How do I add a TOD agreement to my existing RJLU account?
Contact your RJLU financial advisor to complete the individual transfer on death account agreement for your individual or joint accounts. You will not be required to set up a new account. However, the account name will be changed to reflect “TOD DTD MM/DD/YYYY” with the date the TOD was signed.
Consider taking the time to add TOD beneficiaries and contingent beneficiaries to your investment account as part of your overall estate plan. A practical estate plan will allow your family to inherit your wealth without stressful complications.
Raymond James (USA) Ltd. advisors may only transact business with residents of the states and/or jurisdictions for which they are properly registered. The information above is from sources believed to be reliable, however, we cannot represent that it is accurate or complete and it should not be considered personal legal advice. We are not legal advisors and we recommend that clients seek independent advice from a professional advisor on legal matters. Raymond James (USA) Ltd., member FINRA/SIPC.
1 All U.S. jurisdictions recognize TOD designations for investment brokerage accounts except Texas, Louisiana, and Puerto Rico. Refer to this site for the legislation status of each state or territory.
