Is a TOD designation the same as naming a beneficiary

[harley]

Just a word of caution. Setting TOD or naming a beneficiary is good and necessary, but make sure you check it every once in a while. I had set my beneficiaries at TD Waterhouse years ago. Just recently I took a look just for the hell of it, and the beneficiary was some random person's trust. I switched it back, then called them. They (now TDAmeritrade) admitted that they had accidentally made the change when someone transposed a couple of numbers. And they said it would have been dealt with if DW made a claim. But what if the other person's trust had kicked in first. And the reason for doing this in the first place was to avoid complications. So do it, but verify every once in a while.

[SecretlyFI]

Quote:

Originally Posted by harley Just a word of caution. Setting TOD or naming a beneficiary is good and necessary, but make sure you check it every once in a while. I had set my beneficiaries at TD Waterhouse years ago. Just recently I took a look just for the hell of it, and the beneficiary was some random person's trust. I switched it back, then called them. They (now TDAmeritrade) admitted that they had accidentally made the change when someone transposed a couple of numbers. And they said it would have been dealt with if DW made a claim. But what if the other person's trust had kicked in first. And the reason for doing this in the first place was to avoid complications. So do it, but verify every once in a while.

+1
My MIL had a brokerage account at Scottrade, which became TD Ameritrade. My DH was the beneficiary on the Scottrade account, which we had confirmed with them. A few months ago we happened to check the TD account online and there was no beneficiary noted. It had been dropped at some point, probably in the transition. Scary, but glad we checked. I think we were able to re-establish it online without calling them.

[Golden sunsets]

Yes; Checking periodically makes perfect sense. Thanks for the suggestion.

[Cobra9777]

My FIL died last year. Everything transferred seamlessly to DMIL, either via joint ownership or beneficiary/TOD/POD. When DMIL dies, everything will transfer to DW and her brother 50/50, including ownership of the house and car. There will be no assets requiring probate. Personal effects and household goods will be informally divided or sold/donated.

Our stuff is set up same way. Easy. Unless you live in a state that still doesn't allow TOD on real estate and motor vehicles. In which case you should write the appropriate state legislator. Or move.

[ERD50]

Quote:

Originally Posted by RetireBy90 Mom had to move to a retirement home where she could get some assistance and we were able to sell her house about 2 years ago. That removed the last item that would have required probate. At least that was my understanding that the house would need to go through probate. I'm certainly no expert just one experience. Hope your action time is long into future.

What happened with the proceeds from the sale of the home?

Each State may have its own laws, but in IL it is the total $ amount that triggers probate, so a $200,000 house, or $200,000 in investments would both trigger probate.

Now a side comment - it appeared to me that if you didn't have over $100,000 in any one account (the IL probate limit), it would be the "honor system". IIRC, if the trustee tried to take out more than $100,000, the institution would require some probate documentation (or maybe only release it to the probate court?). But if you had a $10,000 account, I think all they might do is ask if probate is involved. I'm not suggesting anyone attempt this, but I do wonder if/how it would be enforced.

-ERD50

[RetireBy90]

Quote:

Originally Posted by ERD50 What happened with the proceeds from the sale of the home? -ERD50

Funds from house were added to her brokerage account so went with the beneficiary designation.

[audreyh1]

Quote:

Originally Posted by Golden sunsets I did speak with the broker today and downloaded the form. This form would supercede the broker beneficiary form already signed by my DM and in the broker's system. But the broker also stated that regardless of which form used, activity is frozen at death(not a surprise) and assigned to a department to resolve with a representative of the estate, so it is still unclear to me if there is any real difference. I will probably complete the form anyway. I've requested a copy of the beneficiary form so that I can compare the two.

I was informed that upon death accounts would be opened for the TOD beneficiaries, and the equities split evenly and moved to the new accounts.

The courts are not involved.

[ERD50]

Quote:

Originally Posted by RetireBy90 Quote: Originally Posted by ERD50 View Post What happened with the proceeds from the sale of the home? -ERD50 Funds from house were added to her brokerage account so went with the beneficiary designation.

Ahhh, OK, that makes sense. Thanks.

-ERD50

[Golden sunsets]

Quote:

Originally Posted by audreyh1 I was informed that upon death accounts would be opened for the TOD beneficiaries, and the equities split evenly and moved to the new accounts. The courts are not involved.

Good to know for when the time comes. We already have a taxable brokerage account at the same broker.

[Golden sunsets]

Quote:

Originally Posted by ERD50 What happened with the proceeds from the sale of the home? Each State may have its own laws, but in IL it is the total $ amount that triggers probate, so a $200,000 house, or $200,000 in investments would both trigger probate. Now a side comment - it appeared to me that if you didn't have over $100,000 in any one account (the IL probate limit), it would be the "honor system". IIRC, if the trustee tried to take out more than $100,000, the institution would require some probate documentation (or maybe only release it to the probate court?). But if you had a $10,000 account, I think all they might do is ask if probate is involved. I'm not suggesting anyone attempt this, but I do wonder if/how it would be enforced. -ERD50

I guess what you are saying then is the State of Illinois does not recognize TOD or POD designations. In my State, Assets with a beneficiary designation escape probate regardless of size.