Can I Withdraw Money From My TOD Account?

A Transfer on Death (TOD) account serves as a direct and efficient method for asset transfer upon the account holder’s passing. This type of account allows an individual to designate specific beneficiaries who will automatically inherit the assets held within it, such as brokerage accounts, investment portfolios, or bank accounts, without the need for a will or the probate process. The primary purpose of a TOD designation is to streamline the distribution of assets, helping to avoid potentially lengthy and costly legal proceedings after death.

Account Holder Withdrawal Rights

An individual who establishes a Transfer on Death account maintains complete control over the assets during their lifetime. This means the account owner can freely withdraw funds, sell securities, or make any other transactions within the account without requiring permission or even notifying the designated beneficiaries.

The account holder also retains the flexibility to modify or revoke the TOD designation at any time. This includes changing beneficiaries, adjusting the percentage of assets each beneficiary is to receive, or even closing the account entirely. The power of attorney generally cannot change the TOD designation unless specifically authorized. This full control ensures that the account remains a fluid part of the owner’s financial planning, adapting to changing circumstances or wishes until their death.

Beneficiary Withdrawal Limitations

Beneficiaries named on a Transfer on Death account have no legal right or access to the funds while the account holder is alive. This limitation prevents beneficiaries from making withdrawals, influencing investment decisions, or making any changes to the account.

Even if a beneficiary holds a power of attorney for the account holder, they cannot withdraw funds for their personal use from the TOD account during the owner’s lifetime. Any withdrawals made under a power of attorney must be solely for the benefit of the account holder. The beneficiary’s right to the assets only materializes upon the verified death of the account owner.

How Beneficiaries Claim Assets

Upon the death of the account holder, beneficiaries must initiate a process to claim the assets held in a Transfer on Death account. The primary document required by financial institutions is a certified copy of the account holder’s death certificate. Beneficiaries will also need to provide their own valid identification and may be asked to complete specific claim forms provided by the financial institution. Some institutions might also request an affidavit of domicile, which confirms the deceased individual’s residency.

After gathering the necessary documentation, beneficiaries should contact the financial institution where the TOD account is held. This can typically be done in person, by mail, or through an online portal, depending on the institution’s procedures. The institution will then verify the documentation and process the transfer of assets. The assets are commonly transferred into a new account opened by the beneficiary, or directly disbursed, often within a few weeks.

If multiple beneficiaries are named, the assets are typically divided according to the percentages designated by the original account holder. In situations where a named beneficiary has predeceased the account holder, their share may be distributed among the remaining beneficiaries, often on a pro-rata basis, unless otherwise specified. Financial institutions aim to complete these transfers efficiently, generally bypassing the need for a lengthy probate court process.