The Uniform Transfer On Death Security Registration Act is an attempt to simplify the transfer of securities when a person dies. Ownership in "beneficiary form" can be shown by the words "transfer on death" or the acronym "TOD", or by the words "pay on death or the acronym "POD", after the name of the registered owner and before the beneficiary. If titled in this manner, then the security passes to the beneficiary or beneficiaries who survive the owner and is not controlled by the terms of the owner's will. TOD or POD ownership has no effect on ownership until the owner's death and the beneficiary can be changed or canceled at any time without the consent of the beneficiary.
Assets transferred via TOD registration generally receive a full step-up in cost basis. In the case of multiple owners, the property must be titled so that ownership will vest in the survivor of them before the asset passes to the named beneficiary. Thus, the owners may hold the property as joint tenants, as tenants by the entireties, or as "owners of community property held in survivorship form." A disadvantage of multiple ownership is that all parties must sign for any future account changes. Under the Act, you can name multiple beneficiaries, contingent beneficiaries and substitute beneficiaries, such as the grandchildren if a child named as beneficiary predeceases the owner. In addition, the trustee of a trust is a permissible beneficiary.
