TOD is a way to pass money to someone after you die, without going through probate

TOD stands for "Transfer on Death." It is a designation you put on a bank account that tells the bank who should receive the money in that account when you die. The person you name—called the TOD beneficiary—gets the funds directly, outside of probate court. The account works normally while you are alive. You keep full control, can spend the money, close the account, or change the beneficiary at any time.

TOD is different from making someone a joint owner of the account. A joint owner has access to the money right now. A TOD beneficiary has no access until you die, and the bank is legally required to transfer the balance to them once they provide a death certificate.

Key Takeaways

  • TOD designations let you name who receives a bank account after you die without the account going through probate.
  • You keep complete control of the account while alive—the beneficiary cannot touch the money until you die.
  • The beneficiary receives only what is in the account at the time of death, and the transfer happens outside of court.
  • You can change or remove a TOD beneficiary at any time by contacting your bank, and the most recent designation is the one that counts.
  • TOD is available on savings accounts, checking accounts, and money market accounts at most banks, but not on credit cards or loans.

How TOD works step by step

When you open a bank account or visit your bank later, you can ask to add a TOD designation. The bank will ask for the beneficiary's full legal name and usually their Social Security number. You sign a form—sometimes called a "Payable on Death" or "POD" form, which means the same thing. The bank keeps this on file.

While you are alive, nothing changes. You use the account normally. The beneficiary does not know about it unless you tell them. When you die, your family or executor notifies the bank with a death certificate. The bank verifies the death and transfers the full account balance to the beneficiary. This usually takes one to two weeks. The money does not go through your will or probate court, so it is not subject to probate delays or court fees.

If you name multiple beneficiaries, most banks split the account balance equally among them unless you specify different percentages. If a beneficiary dies before you do, that person's share typically goes to the remaining beneficiaries, though this varies by bank and state—ask your bank about their specific rule.

TOD versus joint accounts and wills

A joint account gives another person access to your money right now. Both owners can withdraw, spend, or close the account. A TOD beneficiary cannot touch the account until you die. If you need someone to help manage your money while you are alive, a joint account is the right tool. If you only want them to have it after you are gone, TOD is simpler and keeps them out of your finances now.

A will is a document that says who gets your property after you die. Money in a will goes through probate court, which can take months or years and costs money in court and attorney fees. A TOD account bypasses probate entirely. The bank transfers the money directly to the beneficiary. You can have both—a will for property like a house or car, and TOD designations on your bank accounts.

TOD is faster and cheaper than probate, but it only works for bank accounts. It does not cover your house, car, retirement accounts (which have their own beneficiary forms), or personal property. For those, you still need a will or other planning documents.

Which accounts can have a TOD designation

Most banks allow TOD on savings accounts, checking accounts, and money market accounts. Some banks also allow it on certificates of deposit (CDs). Credit cards, loans, and investment accounts typically cannot have TOD designations—those have different rules.

Retirement accounts like IRAs and 401(k)s have their own beneficiary designation process, separate from TOD. Life insurance policies also have their own beneficiary forms. Ask your bank or financial institution which of your accounts can have a TOD designation, because the rules vary slightly by institution and by state.

How to set up or change a TOD designation

Contact your bank in person, by phone, or online. Ask for a "Payable on Death" form or "TOD designation form." Fill in the beneficiary's full legal name and Social Security number. You will need to sign the form, and the bank may require a witness or notary—ask before you start. Submit it to the bank and keep a copy for your records.

To change the beneficiary, contact the bank again with a new form. The most recent designation is the one that counts. You do not need the old beneficiary's permission to change it. If you want to remove the TOD designation entirely, the bank can do that too—the account will then pass through your will or to your heirs under state law.

Some banks let you set up or change TOD online through your account portal. Others require you to visit a branch or call. Check with your specific bank about their process.

What happens to taxes and debts

The money in a TOD account is part of your taxable estate if your total assets are large enough to owe federal estate tax. However, most estates do not owe federal estate tax—the threshold is over $13 million for individuals in 2024, though this amount changes yearly. Your state may have a lower threshold. A tax professional can tell you whether your estate will owe tax.

If you owe debts when you die—credit card bills, medical bills, a mortgage—creditors can make a claim against your estate. In some cases, they can reach a TOD account, depending on your state's laws and the size of your debts. The beneficiary does not personally owe your debts, but the account balance may be used to pay them before the beneficiary receives what is left. This is another reason to talk to a lawyer if you have significant debts.

Common mistakes to avoid

Do not assume the bank will remember your TOD designation. Banks merge, change systems, or lose records. Tell your family where your accounts are and that you have named a beneficiary. Write it down. Keep a copy of the TOD form at home.

Do not name a minor as a TOD beneficiary without a plan for how they will access the money. A minor cannot legally control a bank account. The court may appoint a guardian to manage it, which defeats the purpose of avoiding probate. Consider naming an adult or a trust instead.

Do not forget to update your TOD if your life changes—divorce, remarriage, estrangement from a family member. The designation stands as written, even if circumstances change. Review it every few years.

Frequently Asked Questions

Can the beneficiary access the account before I die?

No. The beneficiary has no legal right to the account until you die and the bank receives a death certificate. They cannot withdraw money, see the balance, or make deposits. You have complete control while you are alive.

What if I die without naming a TOD beneficiary?

The account becomes part of your estate and passes according to your will, or under your state's intestacy laws if you have no will. This means probate court gets involved, which takes longer and costs more than a TOD transfer.

Can I name my estate as the TOD beneficiary?

Technically yes, but it defeats the purpose. If you name your estate, the account goes through probate anyway. Name a person or a trust instead to avoid probate.

What if the TOD beneficiary dies before I do?

It depends on your bank's rules and your state's law. Some banks split that person's share among the remaining beneficiaries. Others may require you to update the form. Ask your bank what happens in this scenario and consider naming an alternate beneficiary.

Is TOD the same as POD?

Yes. POD stands for "Payable on Death" and means the same thing as TOD. Banks use the terms interchangeably. Both refer to a designation that transfers the account to a named person after you die.