Those going through the estate planning process typically want to ensure most of their assets will get to their intended beneficiaries. That means keeping assets from going through the probate process in Colorado. One very favorable way of doing this is by creating a transfer on death (TOD) account. It’s vital to have a firm grasp on what TODs are to determine whether or not they’re right for an individual’s estate planning process.
What exactly is a TOD?
A TOD — which is sometimes referred to as a beneficiary deed in Colorado — is an investment account that passes certain investment rights to a beneficiary upon the death of the account owner. There is no need for these assets to go through the probate process since the transaction occurs when the person dies. TOD accounts can be set up by various investment accounts. Some popular investments include stocks, mutual funds and bonds. A beneficiary can claim ownership of the assets by supplying an official death certificate to the investment company.
Benefits of a TOD account
First and foremost, a TOD account avoids probate. Sidestepping probate can help save money and time when passing assets to beneficiaries. These accounts can also be set up jointly, allowing the owner to add other owners to the TOD account, such as children or other loved ones. When the original owner of the account dies, the TOD account is shared equally between all surviving TOD account owners.
As Colorado residents go into the estate planning process, there are various accounts they might want to set up. A TOD account can be a terrific option for avoiding probate and to automatically transfer assets after a testator’s passing. Doing so may provide much-needed peace of mind in what can sometimes be a complex and stressful process.