A transfer-on-death (TOD) designation is a legal agreement between you and a financial institution that lets you direct how ownership of an account will be transferred upon your death.
During your lifetime, you retain full control of the assets held in the account. You can manage the investments as you see fit, make additions or withdrawals, and move or close the account if you wish. You receive all interest and dividends, and you are responsible for taxes on any income or capital gains. You may change or revoke the TOD designation at any time as long as you are not legally incapacitated.
Giving a taxable (post-tax) account a TOD registration in effect makes it like an IRA or 401K. You are able to actually name the beneficiaries whom you want to receive the assets upon your death. They do not have any ownership or rights in the account during your lifetime.
Consulting with a Financial Advisor can help you decide whether Transfer on Death instructions are right for you and your family.
*Source: Wells Fargo "Transfer - on - Death Designations" article, item #1009-2752 (This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).