Ohio Asset Protection: Transfer on Death vs. Trust Planning
Channel: Elliott Stapleton
Date: 2019-10-29

While a TOD may avoid Probate, it does not solve all family concerns at death. The following is a summary of common interests and potential solutions.

Certainty in your Contingency Plan:

Adding a TOD, without a Trust, may help you avoid probate and direct assets to a surviving beneficiary unless the beneficiary predeceases you. In that circumstance, we cannot be sure what will happen if there is a predeceased beneficiary, as the path and options would depend on the TOD form and related agreement.

Potential Delay in Distribution:

If assets are going to one surviving child/beneficiary, the process is likely going to be quick. In families with multiple children/beneficiaries, before an account is distributed, generally, all beneficiaries must submit their respective claim forms. This could be a requirement by the institution to ensure there is not going to be a dispute on the distribution of assets (note: if there is a dispute, some institutions require submission to arbitration outside of Ohio to resolve disputes).

What happens if a beneficiary is not accessible, in a nursing home, traveling abroad, or not happy with the circumstances surrounding death? In these examples, there could be gridlock in the distribution of assets until all forms are correctly submitted.

Who is in charge?

If all assets distribute immediately to multiple beneficiaries with a TOD (and without a Trust), there may be no one in charge of the distribution of your assets. But if no one is in charge, who pays your final funeral bill, eventual taxes, home expenses before the sale (utilities, property taxes, insurance), and generally takes charge of the process?

In practice, one child or beneficiary steps up and pays all of the overhead expenses out of pocket. After payment is made, this responsible beneficiary now has to seek voluntary repayment from their siblings.

Should I use a TOD?

There can be a valuable use of a TOD in an estate plan. This value is context-specific and requires careful consideration with your estate planning attorney.

For more information on this topic, visit: https://cmrs-law.com/practice-areas/estate-planning-probate/does-a-transfer-on-death-designation-solve-everything/