Avoid Probate with a Transfer on Death Agreement for your U.S. Brokerage Accounts
Written by the Private Client Solutions Group of Raymond James Ltd.,
U.S. residents with retail investment accounts at Raymond James (USA) Ltd. (RJLU) can name beneficiaries to inherit their accounts with a transfer on death agreement (TOD). Adding a TOD is similar to naming beneficiaries for individual retirement accounts and qualified employer plans. A TOD agreement will help your heirs avoid the burdens of probating the account in state court1 after your passing.
Why should I designate a TOD beneficiary?
While alive, you retain total control over the investment account assets. With a TOD on the account, ownership of the account will be passed to your named beneficiaries after you die. The account does not form part of your estate, which allows it to avoid public probate proceedings and probate fees. Your beneficiaries will inherit the account much faster than an account that flows through an estate while maintaining privacy about the inheritance. Note that a TOD supersedes a will or trust for the specific accounts with a TOD agreement. It is important to take into consideration of all your testamentary instruments to ensure your estate plan fulfills your overall intentions.
Who can I name as a TOD beneficiary?
You can name your spouse, children, relatives, friends, charities, businesses, and trusts as beneficiaries. Married individuals may have joint accounts and can also add TOD beneficiaries who will inherit the account upon the death of the last surviving spouse. You can name multiple TOD beneficiaries and specify the percentage or per stirpes allocation to each beneficiary. It is also wise to name contingent beneficiaries in case the original beneficiaries pre-decease you. If your wishes change, you may change beneficiaries or revoke your TOD when needed, provided you have the mental capacity at that time.
You may name beneficiaries located outside of the United States. However, note that we may require the account to be moved out of RJLU to another institution to meet securities regulations. Example: you live in the U.S. and you name a beneficiary who lives in Canada. The Canadian beneficiary can inherit your account, but RJLU will restrict trading until the assets move to our Canadian institution, Raymond James Ltd. The beneficiary can maintain your same Raymond James financial advisor in Canada.
How do I add a TOD agreement to my existing RJLU account?
Contact your RJLU financial advisor to complete the individual transfer on death account agreement for your individual or joint accounts. You will not be required to set up a new account. However, the account name will be changed to reflect “TOD DTD MM/DD/YYYY” with the date the TOD was signed.
Consider taking the time to add TOD beneficiaries and contingent beneficiaries to your investment account as part of your overall estate plan. A practical estate plan will allow your family to inherit your wealth without stressful complications.
Next Steps
If you’re planning on moving to Canada and need assistance with your investments, estate planning, and portfolio management, please contact Snowbirds Wealth Management as we specialize in cross-border financial planning and wealth management. We work closely with experienced cross-border lawyers and accountants to ensure you have a team behind you.
About Snowbirds Wealth Management
Gerry Scott is a portfolio manager and founder of Snowbirds Wealth Management, an advisory firm focused on the cross-border market. Together with Dean Moro and Carson Hamill, associate portfolio managers with Snowbirds Wealth Management, they provide investment solutions for Americans living in Canada, and Canadians residing in the United States. Licensed in both Canada and the US, they provide tailored investment solutions to minimize the tax burden when moving assets across borders.To schedule an introductory call, please click here.
Statistics and factual data and other information are from sources RJLU believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities nor is it meant to replace legal, accounting, taxation or other professional advice. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters. The information is furnished on the basis and understanding that RJLU is to be under no liability whatsoever in respect thereof.
Raymond James (USA) Ltd. advisors may only conduct business with residents of the states and/or jurisdictions in which they are properly registered. Investors outside the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Raymond James (USA) Ltd. is a member of FINRA/SIPC.
