What Is a Transfer on Death (TOD) in Fidelity?

Transfer on Death (TOD) registration is a valuable estate planning tool that allows individuals to designate beneficiaries for their financial accounts. This mechanism ensures that assets held within these accounts can be transferred directly to the named recipients upon the account holder’s death. Utilizing a TOD designation can simplify the asset distribution process, providing a streamlined approach for beneficiaries to receive inherited funds. It offers a direct path for wealth transfer, bypassing certain traditional estate administration procedures.

Understanding Transfer on Death Registration

Transfer on Death (TOD) registration is a designation applied to investment or bank accounts, allowing the account holder to name specific beneficiaries who will directly inherit the account’s assets upon their passing. The primary purpose of establishing a TOD registration is to facilitate a direct transfer of assets, which generally bypasses the probate court process. Probate is a lengthy and costly legal procedure involving court oversight to validate a will and distribute assets. By setting up a TOD designation, assets held in eligible accounts can be transferred more efficiently, reducing the time and expense associated with traditional estate settlement.

This type of registration is commonly offered by financial institutions like Fidelity for various account types. Eligible accounts typically include individual brokerage accounts, joint tenancy with right of survivorship accounts, and tenancy by the entirety accounts. However, TOD designations are generally not applicable to retirement accounts, such as IRAs or 401(k)s, as these have their own separate beneficiary designation processes. A properly established TOD designation takes precedence over instructions in a will, ensuring that the named beneficiaries receive the assets directly.

Establishing TOD Registration at Fidelity

Setting up a Transfer on Death (TOD) registration at Fidelity requires completing specific forms. Account holders must gather personal details for each intended beneficiary, including their full legal name, current address, date of birth, and their Social Security Number or Taxpayer Identification Number. Providing these details ensures Fidelity can correctly identify and process the transfer.

Fidelity provides dedicated forms, such as the “Beneficiaries—Nonretirement Transfer on Death Form,” or offers an online portal section for establishing or updating TOD designations. These forms can usually be accessed directly from Fidelity’s website, often in the “Forms” or “Account Features” section, or by contacting their customer service for assistance. Account holders should list all Fidelity account numbers they wish the TOD designation to apply to.

When completing the forms, account holders must clearly specify the percentage of assets each beneficiary is to receive if there are multiple beneficiaries; otherwise, assets will typically be distributed equally among primary beneficiaries. Account holders can name both primary beneficiaries, who receive assets first, and contingent beneficiaries, who would inherit if all primary beneficiaries predecease the account holder. All account owners listed on the account must sign and date the form to validate the designation. Fidelity also allows account holders to change or revoke beneficiary designations at any time prior to their passing by submitting a new form.

Executing the Transfer Upon Death

When an account holder with a Transfer on Death (TOD) registration at Fidelity passes away, the designated beneficiaries must follow a specific process to claim the assets. The initial step involves notifying Fidelity of the account holder’s death. This notification can typically be made by calling Fidelity’s customer service, sending a written notice, or visiting an investor center.

Beneficiaries will then need to provide essential documentation to Fidelity. A certified copy of the death certificate is a primary requirement to verify the account holder’s passing. Fidelity’s Transition Services team will guide beneficiaries through the subsequent steps, which often include completing specific beneficiary claim forms.

Once all necessary documentation and forms are submitted, Fidelity will verify the claim and proceed with the asset transfer. This process involves re-registering the account in the beneficiary’s name or establishing new accounts if there are multiple beneficiaries. While TOD accounts generally bypass probate, beneficiaries should be aware that inherited assets may still be subject to federal estate taxes if the estate exceeds the federal exemption amount, or state-specific inheritance and capital gains taxes. Fidelity assists in facilitating this transfer, though the exact timeframe can vary depending on the account type and individual circumstances.