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A transfer on death (TOD) bank account is a popular estate planning tool designed to avoid probate court by naming a beneficiary. However, it doesnt avoid taxes. Transfer on death accounts are exposed to federal estate taxes and state inheritance taxes upon the owners death.
A TOD account skips the probate process and takes precedence over a will. If you will all of your money and property to your children but have a TOD account naming your brother the beneficiary, he will receive whats in the account and your children will get everything else.
No plan for incapacity. If you suddenly become incapacitated and unable to manage your own affairs, a transfer-on-death clause will do nothing to help you. Your beneficiary will not be able to access the money to pay your bills because they only get the money once you have died.
If you have real estate property, and want it to transfer to loved ones without passing through probate, a transfer on death (TOD) deed may be the answer. Because a TOD deed, also known as a beneficiary deed, bypasses probate, it can simplify the inheritance process and reduce costs for your loved ones.
During your lifetime, you retain full ownership and control of assets in a TOD account. You can manage the investments as you see fit, make additions or withdrawals, and move or close the account if you wish.
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The primary advantage of naming TOD beneficiaries is that the inheritance process is much simpler, faster, and less expensive. The owner has defined who will receive their assets when they pass away. The TOD beneficiary instruction allows heirs to avoid probate and takes precedence over any will that might be in place.
What Is the Difference Between TOD and Beneficiary? A transfer on death is an instrument that transfers ownership of specific accounts and assets to someone. A beneficiary is someone that is named to receive something of value.

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