Transfer on Death (TOD) and Death Beneficiary Accounts and the Perils of DIY Estate Planning

STOCKBROKER LAW - Posted on February 18, 2025

The past decade has seen an explosive growth in the number of investors who utilize their securities brokerage accounts, both retirement-type accounts and non-retirement accounts as the centerpiece of their estate planning strategy, oftentimes without consulting competent legal counsel, as well as without following up with brokerage-specific forms available to designate death beneficiaries for these accounts. Transfer on death (TOD) established accounts, if properly configured, can avoid the hassles, costs, and delays of probate – but not always.

Designating a loved one or relative as a death beneficiary on a brokerage account is not a guarantee that the investments in the account will be transferred without any problems or delays – or even honored. Brokerage firms have utilized voice recognition technology and other forensic assessments of beneficiary designations, making known their own determination as to whether they will or will not honor such provisions. In circumstances where a brokerage firm decides not to honor a death beneficiary, however, death beneficiaries must then decide how to advance their interests, requiring inquiry into separate testamentary documents, such as last Wills and Testaments.

Failed death beneficiary designations can see assets in such accounts defaulting to the decedent’s intestate estate, a scenario which can set into motion lengthy litigation between designated death beneficiaries designated in brokerage accounts against separate individuals designated in Wills or the intestate succession scheme.

We offer a free consultation to individuals embroiled in death beneficiary designation disputes. For a free initial consultation, contact the Law Offices of Timothy J. O’Connor at 518-426-7700.