Pros and Cons of using TOD accounts to avoid probate

Pros and Cons of using TOD accounts to avoid probate

For one to be able handle a loved one’s estate (properties, assets and other items left behind by that person), he or she would need a grant of probate. The probate is actually what would give an individual permission to handle and settle the affairs of a deceased person’s estate.

In some states, applying for a grant of probate can take a very long while and most times, people don’t just want to waste much of their effort going through the whole process. This is one of the main reasons why they just opt for the idea of totally avoiding the process and this can be done in several ways.

Other ways probate can be avoided

Before we talk more about the use of Transfer-on-death accounts to avoid probate, let us discuss  6 other different ways an individual can utilize in order to avoid probate.

  • Take advantage of smaller estates
  • Give away properties
  • Revocable Living Trusts
  • Use Pay-on-death accounts
  • Consider joint ownership for real estate
  • Consider joint ownership for other properties

The ones  listed above are some of the other possible means that can be used to avoid probate but you should also note that they all have their pros and cons just like the use of TOD accounts.

What is a TOD (Transfer-on-death) account?

An account that automatically transfers its assets to a verified intended beneficiary when an individual dies is what we refer to as a Transfer on death account. This is one of the preferable ways many people consider while they are still alive so that they can easily avoid the whole probate process and make it easier for their beneficiaries when dealing with their estate.

 A designated beneficiary will directly be in charge of the assets owned by the deceased before he or she passed on. So now that we already have an idea on what a TOD account is, let us discuss about the pros and cons of using it to avoid probate.

The Pros/Advantage

For someone to recommend using a TOD account, then there must be several good reasons why he or she did so, some of which are the following:

  • It is revocable and this allows you to easily change the designated beneficiaries
  • The assests in your TOD accounts are directly passed unto your beneficiaries with ease
  • It is less complex and less costly to draft than a living trust
  • It can supercede the will of a deceased individual
  • It also allows the owner to retain a present interest in the residential real estate while they’re still alive

The Cons/Disadvantages

Alternatively, there are quite some disadvantages attached to using a TOD account to avoid probate and some of them could lead to a bigger problem if care is not taken. Some of these disadvantages are as follows:

  • You cannot name an alternate or contingent beneficiary
  • There are limits and special rules for minors who are designated for Transfer On Death accounts
  • The use of TOD accounts can only be more effective and beneficial to people with small estates
  • The use of TOD accounts may help you avoid probate but it may not be able to help you avoid estate taxes


Ensure you consider the advantages and disadvantages of using TOD accounts to avoid probate before you make a move. You can talk to a professional pro bate attorney to figure out easier alternatives.

Need an estate planning attorney?

If you want to plan your estate, and you need the services of an experienced estate planning attorney, please, don’t hesitate to contact us. Also, if you need help with updating your estate plan, you can contact our office as well. We boast of competent estate planning attorney who can help in creating an estate plan that suits your needs.

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