POD stands for “payable on death,” and TOD stands for “transfer on death.” They are both beneficiary designations that you put on an asset to avoid Probate Court and transfer that asset upon your death directly to the listed person. On bank accounts and investment accounts, you can add a POD beneficiary designation listing who you want to receive that account upon your death.
In Missouri, you can go to the DMV to add a TOD beneficiary to your car title. Such designations do not transfer ownership of that asset while you’re living, but the transfer is only effective upon your death. Missouri law does not limit how many POD or TOD beneficiaries you can list on an asset, but each institution may have their own restrictions limiting the number or the varying percentages that you can list. You cannot draft a blanket POD/TOD designation to cover all of your assets – you have to go to each institution where you have an account and put such a designation on each separate account that you own.
Upon your death, the person or persons listed as that POD or TOD beneficiary will need to go to the appropriate institution where that account is located, present a death certificate and show identification. That account or asset should then immediately be transferred over to them and retitled in their name or names, thus completely avoiding Probate Court.
It should be noted that POD and TOD designations supersede whatever is in your Will or Trust. E.g., if a particular asset has a POD or TOD listed, that asset will pass to the listed person regardless of what your Will or Trust says. Therefore, they should only be used in conjunction with your other Estate Planning documents. Our office usually gives you detailed instructions on whether you should set up any POD or TOD accounts and who should be named.
There are limitations to POD/TOD designations, and they should not be used to replace a Trust to avoid Probate Court. You should usually avoid naming minor children as a beneficiary under a POD/TOD designation as that will most likely necessitate an expensive and cumbersome Conservatorship to be set up for that minor as children under the age of 18 cannot hold property in their individual name. A POD/TOD designation is sometimes limited in naming detailed contingent beneficiaries in the event that the first named person predeceases you. Further, with POD/TOD designations, you do not have the ability to spread that gift out over time like you do with a Trust (e.g., giving them 1/3 at age 25, 1/3 at age 30 and 1/3 at age 35).
While PODs and TODs have a place in Estate Planning, they are not as flexible and comprehensive as a Trust in avoiding Probate Court. Our office would be glad to discuss this with you or answer any questions that you may have. To learn how the law applies to your specific circumstances, schedule your FREE consultation with an experienced estate planning attorney online or call our office at 314-727-0163.