Transfer on Death TOD Law and Legal Definition

Transfer on death (TOD) registration allows you to pass the securities you own directly to another person or entity (your "TOD beneficiary") upon your death without having to go through probate. By setting up your account or having your securities registered this way, the executor or administrator of your estate will not have to take any action to ensure that your securities transfer to whomever you have designated. However, TOD beneficiaries must take steps to re-register the securities in their names. This typically involves sending a copy of the death certificate and an application for re-registration to the transfer agent.

State law, rather than federal law, governs the way securities may be registered in the names of their owners. Most states have adopted the Uniform TOD Security Registration Act, although some have modified it. In addition, brokerage firms may decide whether or not to offer TOD registration.

TOD transfers may also be established for other types of assets, such as CDs and mutual funds, as well as TOD deeds for real property. The beneficiary may name more than one beneficiary to share in the proceeds. If there are multiple owners of the account the beneficiary is not entitled to the asset until the death of the last named co-owner. State laws vary, so local laws should be consulted for applicability in your area.