TOD and POD Designations Can Replace Revocable Trusts for Some Assets

Full analysis

Revocable trusts — arrangements where you transfer ownership of assets to a trust you control during your lifetime, avoiding the public court process called probate at death — are a standard estate-planning tool, but not always necessary. Transfer-on-death (TOD) and payable-on-death (POD) designations, which name a beneficiary directly on a financial account or piece of real estate, can accomplish the same probate-avoidance goal with lower fees and less paperwork. In some states, TOD designations are also available for automobiles. The practical takeaway for anyone reviewing their estate plan is to ask whether simpler beneficiary designations on existing accounts might be enough, rather than assuming a full revocable trust is required.