Ask the Probate Judge—Claiming POD & TOD Property
Rudd, appeared April 10, 2003, Albuquerque Journal, Business Outlook
Reprinted with permission
Editor's note: This column may not be quoted or reproduced in whole or part without express written permission of the author.
Q: Re: payable on death (POD) and transfer on death (TOD) accounts: How are these documents prepared? Is an attorney required? Where are they kept or filed? Should they be notarized? Upon the death of a property owner, what action is necessary by designated beneficiaries? S.J.R., Santa Fe
The mechanics of creating a POD beneficiary for bank accounts and CDs or TOD beneficiary for stock securities may vary from institution to institution. But most banks, credit unions, and stock brokerage firms have forms for you to name a beneficiary or beneficiaries to receive your accounts after your death. No attorney is required.
You can name one or more individuals as beneficiaries. Although not every institution requires all of this information, you should have available the beneficiary's name, address, relationship, date of birth, and social security number. If applicable, you should designate the percentage of the account allotted to each beneficiary. If you are married and the beneficiary is not a spouse, spousal consent may be required.
You can also name a specific charity, school, or other entity as beneficiary. Bring the entity's name, address, and tax identification number.
Brokerage TOD beneficiary forms are often notarized by notaries available on site. Bank POD beneficiary forms are not usually notarized.
Some forms may allow you to name alternate beneficiaries in case one dies. If not, be sure and review your beneficiary designations periodically, especially if one has predeceased you. You can also change, add, or remove beneficiaries.
Several banks told me that if you name multiple POD beneficiaries, you should name "Beneficiary A AND Beneficiary B," rather than "Beneficiary A OR Beneficiary B." The "AND" designation means that both beneficiaries must appear to release the funds. The "OR" designation would allow all the funds to be released to the first beneficiary to appear. Another option would be to create separate CDs for each beneficiary and name only one beneficiary per CD.
The institution will keep the original beneficiary designation form on site. You might request a copy for your records.
Once the owner of the account dies, the procedure to claim the account seems fairly standard. The named beneficiary (or beneficiaries) goes to the institution with the account owner's original death certificate and proof of the beneficiary's identification, such as a driver's license. If the account has two or more owners and both have died, the beneficiary should bring original death certificates for both owners.
The brokerage firms may also require the TOD beneficiary to fill out a notarized affidavit of domicile and a transfer on death affidavit. Banks do not require these documents.
Once these documents are presented, the institution should release the funds. The bank should give the beneficiary a cashier's check. Early withdrawal penalties for CDs are waived when the owner dies. Even if the CD is not yet "due," it should be released without any penalty.
The brokerage firm might open an account in the beneficiary's name or transfer the beneficiary's share of account assets to the beneficiary's pre-existing account with another brokerage.
© 2003, Merri Rudd & Albuquerque Journal, All Rights Reserved