| Read Time: 4 minutes | Estate Planning
A lawyer reviewing about the advantages and disadvantages of Transfer on Death Designations.

No one likes to think about their eventual death, but planning ahead can smooth the way for your family. Most people seek to limit the burden and expense imposed on their loved ones after they die. While a will and trust often provide the best way to achieve this goal, you can pass some assets more easily with transfer on death designations. Reach out to the Law Office of Andrew M. Lamkin, P.C., for advice on which strategies make the most sense for your estate.  

What Are Transfer on Death Designations?

As the name implies, transfer on death designations conveys money or other personal property directly to a beneficiary upon the owner’s death. The proceeds do not become part of the decedent’s estate, nor do they go through probate. 

There are two main types of transfer on death designations in New York—“transfer on death” (TOD)  and “payable on death” (POD). 

Transfer on death provisions are common with stocks, bonds, and other securities. Your brokerage company may also offer the option to name a beneficiary for your entire brokerage account.

Banks and credit unions often offer account holders the option to make their accounts payable on death. With a POD account, when the owner of a checking, savings, or certificate of deposit account passes, the designated beneficiary receives the funds. They may be required to provide a copy of the owner’s death certificate first. 

How to Make a Transfer on Death Designation

The owner can usually add TOD or POD provisions to an account by filling out a form. If the designated beneficiary passes away or the owner simply wishes to change beneficiaries, they can easily alter their choices. 

Advantages of Transfer on Death Designations

There are many advantages to designating a beneficiary with this type of provision. First, the beneficiary does not have an ownership interest during the account holder’s lifetime. The beneficiary also does not need to consent when the owner wants to change who inherits. Other options for passing things like bank accounts involve making the recipient a joint account holder. In this case, the other individual immediately has access to the money and authority to make decisions regarding its disbursement, which is not always ideal.

Second, transferring assets via a POD or TOD provision avoids probate. The property never becomes part of the estate, so it does not need to be administered. This also prevents any uncertainty as to who should inherit.

Finally, assets transferred this way pass quickly. This speed could prove vital to a spouse or other beneficiary who depended on the decedent and whose other property is tied up in trust or probate administration. 

Disadvantages of Transfer on Death Designations

One must think carefully and regularly reassess their use of a TOD or POD designation because there can be downsides to these provisions. 

Beneficiary Dies First

If the beneficiary predeceases the owner, the property will not pass as intended. Thus, you must remember to make a new TOD or POD designation if your intended beneficiary dies before you do. 

Trumps Your Will

It is also essential to ensure your choices mesh with your estate plan. A TOD or POD provision usually trumps any bequeaths you make in your will. So, if you forget your bank account had a POD provision in favor of your ex-wife and left the account funds to your brother in your will, your ex-wife likely will receive the proceeds. 

Unpaid Debt and Taxes

Issues can also arise if you die with debt or unpaid taxes and some of your accounts were POD or TOD. Though creditors and the government might ultimately be able to recover the money due, it can be more challenging than simply making claims against the estate. One exception is Medicaid. Medicaid has expanded the definition of “estate” to include some assets that would otherwise transfer via POD provisions—so they could have an easier time recovering money.

Bequeathal May Cause Harm

In some situations, TOD or POD transfers may cause more harm than good. If the beneficiary receives some form of public assistance, their eligibility likely hinges on financial need. When the beneficiary receives funds via a TOD or POD provision, it could suddenly disqualify them from benefits. But if the inheritance is not enough to sustain them long-term, this loss of benefits presents a significant problem. 


Also, transfers to minors should not be done through such designations. Before the child could obtain access to the stocks, bonds, or other proceeds, a court would need to appoint a guardian. Because this process can be burdensome and expensive, it negates the benefit of using a TOD or POD provision. Trusts provide a better method of leaving assets to minors.

Transfer on Death Deeds

In some states, transfer on death deeds provides an easy way to transfer real estate or motor vehicles outside the decedent’s estate. Unfortunately, New York does not allow its residents to execute a transfer on death deeds for New York property. 

The New York State Department of Motor Vehicles does, under limited circumstances, allow the transfer of a vehicle to a surviving spouse or child by affidavit. But this is done by the survivor after the owner’s death. 

Learn More About How to Transfer the Assets in Your Estate

It can be difficult for even the savviest planner to determine the best way to distribute property. And because families grow and change and buy and sell assets along the way, this problem presents a moving target.

Attorney Andrew Lamkin works one-on-one with his Long Island clients to map out the best strategy for their unique situations. And he develops lifelong relationships, so as his clients’ lives change, he helps them modify their estate plans as needed. Named to the Top 40 Under 40 by The National Trial Lawyers, Andrew also excels at protecting his client’s interests in court if necessary. When it comes to estate planning, you need an attorney who knows how to make all the pieces fit into a seamless framework. This means taking into account asset protection, estate tax liability, TOD and POD designations, probate, advance directives, Medicaid planning, Veterans benefits, and sometimes, special needs trusts. Trust the lawyer of the Law Office of Andrew M. Lamkin, P.C., to be your planning partner. Contact us today for a free consultation.

Author Photo

Andrew Lamkin is principal in the law firm of Andrew M. Lamkin, P.C., where he focuses his practice in the areas of elder law, estate planning and special needs planning, including Wills and Trusts, Medicaid planning, estate administration and residential real estate transactions. He is admitted to practice law in New York and New Jersey.

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