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Pay on Death / Transfer on Death Accounts

Another effective will substitute is the pay on death (POD) bank account. A depositor places funds in the account and names a beneficiary. During the account holder’s lifetime, the account operates like any other bank account — the owner makes deposits and withdrawals freely. Upon the owner’s death, the balance passes directly to the designated beneficiary, outside of probate. The beneficiary must provide the institution with proof of the account holder’s death to take possession.

A key feature of the POD account is that the account holder retains complete control during their lifetime. The beneficiary has no rights to the account while the owner is alive. The account holder may change the beneficiary designation at any time without the beneficiary’s approval — unlike joint tenancy, where co-owners share control.

Transfer on Death (TOD) Accounts

As of January 1, 1995, Florida brokerage firms may open accounts similar to POD bank accounts. These transfer on death (TOD) accounts, governed by the Florida Uniform Transfer on Death Act, operate the same way as POD accounts but may contain securities (certificates or book-entry) and cash balances.

Key provisions of Florida’s TOD law:

  • Securities may be newly purchased and registered as TOD, or existing securities may be retitled as TOD
  • Securities held individually or jointly as WROS may be transferred into TOD form; securities held as tenants in common cannot be re-registered in TOD form
  • The account holder has complete control over assets during their lifetime
  • Single or joint account ownership is permitted; if there are two or more account owners, all must agree on a beneficiary change
  • The law does not require brokerage firms, transfer agents, or registrars to offer TOD registration — each firm may establish its own policies
  • Florida law permits POD and TOD accounts to be jointly held — the balance passes to the beneficiary upon the death of the last surviving co-holder
  • The depositor may designate more than one beneficiary; multiple beneficiaries share an undivided, equal interest as tenants in common upon the account holder’s death
  • If no beneficiary survives the account holder, the account balance reverts to the probate estate

Acceptable TOD Designations

Florida TOD Registration Examples

John S. Brown Sr. TOD John S. Brown Jr.
Single owner, single beneficiary
John S. Brown Sr. and Mary A. Brown JT TEN TOD John S. Brown Jr.
Multiple owners (joint tenants), single beneficiary
John S. Brown Sr. TOD John S. Brown Jr. and Susan B. Anthony
Single owner, multiple beneficiaries
John S. Brown Sr. TOD John S. Brown Jr. SUB BENE Peter Q. Brown
Single owner, primary beneficiary, and substitute (contingent) beneficiary
John S. Brown Sr. TOD John S. Brown Jr. LDPS
Single owner, primary beneficiary, and lineal descendants per stirpes as contingent beneficiaries
Estate tax note: While POD and TOD accounts avoid probate, they do not avoid the taxable estate. The account balance is generally includable in the deceased account holder’s gross estate for federal estate tax purposes. Probate avoidance and estate tax reduction are separate planning goals that require different tools.
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