In previous $ Tips I talked about beneficiaries and how important it is to make sure you keep them up to date.
In your IRA, 401k or 403b and life insurance policies, you name beneficiaries. Those persons are entitled to receive all the money in that particular account.
No matter what your Will might say, the named beneficiaries get whatever is held in that account at your passing. It overrules your will AND it avoids Probate. (meaning your heirs can get the money almost immediately without court reviewing the will.)
All this is building up to the TOD - Transfer on Death.
This is one way to ensure a particular person (or persons) receives the contents of your account at your death. It works similarly to naming a beneficiary. It applies to taxable accounts not tax-deferred (IRA,401k,SEP).
When you open a brokerage account, mutual fund, CD, checking or savings account you may want to open it as a TOD account. Many folks would open a "joint" account so money could pass on to a spouse, son, daughter or friend quickly and easily. But that would also give the spouse, son or daughter, friend access to the money as a "joint" owner. A TOD account gives your beneficiary quick access but only at your passing.
So the same caution is to remember to keep your beneficiaries current.
After a death, a divorce, or birth review your beneficiaries so the right persons get the assets.
Be $ Smart!
