Transfer on Death mechanics

jsncpa

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My father just passed and had three after-tax brokerage accounts. The one that I'm farthest along with right now is TOD.

His broker (real, live human being, Dad was that guy) included in the description of the process that "an estate account will be set up for [Dad]'s existing account. Once the transfer into the estate account has finalized, distributions to [Sis] and you can be initiated by transferring assets to another brokerage account you both may have, establishing new accounts with me, or liquidating and sending checks..."

The "estate account" seems unnecessary to me. TOD means on death... transfer... to the designated beneficiaries. Subsequent phone tag led to him affirming that this was what he meant. Does this sound normal? Maybe it's a procedural thing I'm getting hung up on, but his verbiage makes it sound like it will go through the estate.
 
Condolences to you and your family.

The TOD account doesn't go through the estate. At least, it didn't when mom passed away: it went directly to the beneficiary. Some brokers may require you to (or at least make things much easier if you) open an account with that broker to receive the TOD funds.
 
I suspect that this is a brokerage firm procedure, not an estate/probate procedure. This likely something that that brokerage does; not something required by probate law. Estate accounts are typically set up by the Executor, certainly not a broker. You are correct in that TOD does not need to go through probate. (unless this is a state-specific requirement)
 
We didn’t go through an estate account. The brokerage opened accounts for the 3 beneficiaries and transferred the assets shortly after they received the death certificate.

TOD bypasses any estate.
 
Condolences to you and your family.

The TOD account doesn't go through the estate. At least, it didn't when mom passed away: it went directly to the beneficiary. Some brokers may require you to (or at least make things much easier if you) open an account with that broker to receive the TOD funds.
Thank you.

I can understand a need to set up accounts in our names- I'm doing that for five inherited IRA's right now- I just don't get the need to set up a new account in his name, particularly using confusing "estate" nomenclature.

Edit cuz I cat spel.
 
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I suspect that this is a brokerage firm procedure, not an estate/probate procedure. This likely something that that brokerage does; not something required by probate law. Estate accounts are typically set up by the Executor, certainly not a broker. You are correct in that TOD does not need to go through probate. (unless this is a state-specific requirement)
Thanks. It's Tennessee and there's no such requirement I'm aware of.
 
We didn’t go through an estate account. The brokerage opened accounts for the 3 beneficiaries and transferred the assets shortly after they received the death certificate.

TOD bypasses any estate.
Sounds right to me. Don't understand the intermediate step.
 
The intermediate step is either (a) the broker doesn't know what he's doing, which would not be surprising, or (b) the broker is attempting to make things more difficult for you to get the money to where you want it and is hoping you and your sibling become his new clients by being worn down.

(a) is probably very common. I observed (b) when we collected on my Mom's life insurance - they would have made it easy for us to roll the life insurance proceeds into another account with the insurance company, but made it a bit difficult for us to get them to write us a check (which is what we wanted to do so we could put the proceeds where we thought best).
 
The intermediate step is either (a) the broker doesn't know what he's doing, which would not be surprising, or (b) the broker is attempting to make things more difficult for you to get the money to where you want it and is hoping you and your sibling become his new clients by being worn down.

(a) is probably very common. I observed (b) when we collected on my Mom's life insurance - they would have made it easy for us to roll the life insurance proceeds into another account with the insurance company, but made it a bit difficult for us to get them to write us a check (which is what we wanted to do so we could put the proceeds where we thought best).
I may be naive, but I do have a hard time believing (b). Dad was a client for 30 years and was a good judge of character, and the guy should know I'm realatively savvy by now, having arranged my prior POA with him. This is Cetera, and I take it he's an independent with a back office common to a lot of independents. Will have another 1 on 1 conversation, and I'll probably try to get directly to the back office.
 
I may be naive, but I do have a hard time believing (b). Dad was a client for 30 years and was a good judge of character, and the guy should know I'm realatively savvy by now, having arranged my prior POA with him. This is Cetera, and I take it he's an independent with a back office common to a lot of independents. Will have another 1 on 1 conversation, and I'll probably try to get directly to the back office.

Your original question was a fairly straightforward one, so the broker might consider you savvy but not aware of how these things work. Most brokers are salespeople more than anything, and he may figure he can persuade you via (a) your lack of knowledge, (b) throwing up roadblocks until you give up.

Demonstrating savvy (and knowledge) will help; demonstrating resolve and determination to do things the way you want will get you a lot further.
 
We didn’t go through an estate account. The brokerage opened accounts for the 3 beneficiaries and transferred the assets shortly after they received the death certificate.

TOD bypasses any estate.
+1... We went through this recently. I had each beneficiary (my 4 siblings) set up a brokerage account with the same broker (Schwab in our case) and I provided Schwab with Mom's death certificate and Schwab transferred 20% of each position to us within a day or two. No estate account.

I also made sure that the basis of positions were increased to the fmv as of her date of death.

Ditto for Mom's tIRA and Roth IRA accounts.

After the transfer, each heir could leave accounts at Schwab, transfer to the broker of their choice, keep or liquidate securities in the account, etc.
 
I'd look for a check cut after liquidating the holdings personally. I have little patience for forcing my hand to open an account just to get the transfer. Should be a simple process if it's a Transfer on Death.

We recently cleaned up all our accounts, house and cars on this. Don't want any problems for DD.
 
JSNCPA-
We did two estates in Tennessee (2020 and 2023) whereas my wife was the Executrix and we were guided by the family attorney. The estates included life insurance, annuities, brokerages, many banks, land and dwellings. For certain, the brokerage estate account is not a "law" thing; it is a brokerage "policy/procedure" thing.
 
When I did DOA transfers for my parents' accounts, I just needed death certificates.

As a caveat, with larger estates, because assets do not pass though probate, does not necessarily mean that they are not within the taxable estate.
 
I'd look for a check cut after liquidating the holdings personally. I have little patience for forcing my hand to open an account just to get the transfer. Should be a simple process if it's a Transfer on Death.

We recently cleaned up all our accounts, house and cars on this. Don't want any problems for DD.
I live in Atlanta; mail is currently the pony express without the pony (or the express). The check I mailed for my company SUI last quarter took a month to go 10 miles. I'd be terrified to have a literal paper check for six figures floating though the mail system. Plan to direct transfer to either my Vanguard or Schwab account.
 
JSNCPA-
We did two estates in Tennessee (2020 and 2023) whereas my wife was the Executrix and we were guided by the family attorney. The estates included life insurance, annuities, brokerages, many banks, land and dwellings. For certain, the brokerage estate account is not a "law" thing; it is a brokerage "policy/procedure" thing.
That's what I'm hoping, as far as simply policy.
 
When I did DOA transfers for my parents' accounts, I just needed death certificates.

As a caveat, with larger estates, because assets do not pass though probate, does not necessarily mean that they are not within the taxable estate.
They also want the court docs for me being executor and his state of domicile. Only such request I've had so far among 7 different institutions.
 
Was that difficult? Been wondering about that. Wasn't sure if it was automatic.

In my experience, not automatic but also not difficult.

They also want the court docs for me being executor and his state of domicile. Only such request I've had so far among 7 different institutions.

This shouldn't be at all necessary if there is a proper TOD on the account. I'm sort of wondering now if you think there is a TOD but there isn't. If there is no TOD, then the account would go through the estate process, which would involve you getting appointed as executor and going from there.
 
In my experience, not automatic but also not difficult.



This shouldn't be at all necessary if there is a proper TOD on the account. I'm sort of wondering now if you think there is a TOD but there isn't. If there is no TOD, then the account would go through the estate process, which would involve you getting appointed as executor and going from there.
TOD is right in the account title. We're also explicitly listed as beneficiaries on the statements. He's not disputing TOD.
 
As a caveat, with larger estates, because assets do not pass though probate, does not necessarily mean that they are not within the taxable estate.
Not enough to be a Federal issue, and none in TN.
 
TOD is right in the account title. We're also explicitly listed as beneficiaries on the statements. He's not disputing TOD.

OK, then the executor stuff is completely irrelevant and unnecessary. Copy of the death certificate is all you need to provide, plus your and your sister's personal details (name, address, SSN) so they can open up the receiving account for you both.

My latest theory is that the broker simply doesn't know what he's doing.
 
OK, then the executor stuff is completely irrelevant and unnecessary. Copy of the death certificate is all you need to provide, plus your and your sister's personal details (name, address, SSN) so they can open up the receiving account for you both.

My latest theory is that the broker simply doesn't know what he's doing.
I just talked to him and he gave me a back office number I'll be calling. He said this is the second one he's dealt with in two years, which doesn't seem like a lot. The demographics for folks who use individual brokers you call on the phone must certainly be skewed to the geriatric set.
 
I just talked to him and he gave me a back office number I'll be calling. He said this is the second one he's dealt with in two years, which doesn't seem like a lot. The demographics for folks who use individual brokers you call on the phone must certainly be skewed to the geriatric set.
Hopefully the back office has more experience.
 
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