Transfer on Death and Pay on Death Designations
“Transfer on death” (TOD) and “pay on death” (POD) accounts are your property and completely in your control during your life. At your death, they are paid or transferred to the persons you name as the recipients. No one other than you has any right to this property during your life. The property passes outside of probate to the named recipient, rather than the person listed in your Will or your heirs, when you die. You can change the beneficiaries on these accounts at any time. Real estate and personal property such as furnishings and automobiles can be transferred on death by a Deed, bill of sale, or other proper written instrument.
Payable-on-death bank accounts offer an option to keep money out of probate – just fill out a simple form at the bank naming the person you want to inherit the money in the account at your death. As long as you are alive, the person you named does not have any rights to the account. You can spend the money, name a different beneficiary, or close the account. At your death, your named beneficiary can go to the bank with proof of identity and your death certificate and receive the funds. If the bank account is joint, the pay-on-death designation does not come into play until after the death of the joint owner. Also, your retirement accounts (such as 401(k)s and IRAs) give you the option to name a beneficiary, which act the same as a pay-on-death designation.
Indiana has adopted a law (Uniform Transfer-on-Death Securities Registration Act) that allows you to name a beneficiary to inherit your stocks, bonds, or brokerage accounts. When you register ownership, you make a request to take ownership in “beneficiary form.” The beneficiary will have no rights to the stock, bond, etc. as long as you are alive. After your death, the beneficiary you named can claim the securities. Similarly, you can name someone to inherit your vehicle by indicating a beneficiary on your certificate of registration. With real estate, you can sign a Transfer on Death deed that will transfer the real estate to whom you name at your death.