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Transfer on Death (TOD) Accounts in Estate Planning: Is It a Replacement for a Will?

Have you heard the term “Transfer on Death (TOD) account” and wondered what it means for your estate planning? If you’re like many people looking to simplify the process of passing on their assets, TOD accounts or deeds may sound like a perfect solution. But are they enough to replace a legal Will entirely? The answer is—it depends. While TOD accounts can play a useful role in avoiding probate and ensuring swift asset transfer, they have their limitations.

Let’s explore how TOD accounts work, their benefits, and why combining them with a comprehensive Will may be the most effective estate planning strategy.

What is a Transfer on Death (TOD) Account? 

A Transfer on Death (TOD) account is a financial arrangement that allows you to name a beneficiary to inherit your assets directly after your death. The transfer bypasses probate, making the process quicker and less stressful for your loved ones. Common assets that can utilize TOD designations include bank accounts, brokerage accounts, and even real estate in some states, such as Georgia.

For example, if you live in Georgia, you can take advantage of a Transfer on Death deed to pass real estate directly to a named beneficiary without going through probate.

Why Do People Choose TOD Accounts? 

TOD accounts have become increasingly popular, largely due to their simplicity and convenience. Here are some reasons people prefer them:

  • Avoids Probate: Probate can be a time-consuming and expensive process. TOD accounts transfer ownership immediately, sparing your beneficiaries from long court proceedings.
  • Ease of Access: After your death, the beneficiary needs only to present a death certificate to claim ownership of the asset, such as withdrawing funds from a bank.
  • Customization: You maintain complete control over the asset during your lifetime and can change the named beneficiary at any time.

While these factors make TOD accounts appealing, they are not without limitations.

Can TOD Accounts Replace a Will? 

While TOD accounts offer significant benefits, they fall short of replacing a Will. Here’s why:

  • Restricted Asset Coverage: TOD only applies to certain types of assets. For example, in Georgia, vehicles and other personal property cannot be transferred via TOD.
  • Complex Family Dynamics: TOD designations only transfer ownership of a specific account to one or more beneficiaries. For assets that need to be divided or handled in a specific way, a Will is essential.
  • Potential Conflicts: TOD designations supersede instructions in a Will. If your beneficiary designations in your TOD account conflict with your Will, it could lead to legal confusion or disputes.

Therefore, while TOD accounts streamline the transfer of certain assets, they are not a comprehensive solution for estate planning.

How Do TOD Accounts Work in Georgia? 

Georgia law allows TOD accounts for financial assets like bank accounts and investment accounts. Additionally, as of 2024, Georgia has introduced the Transfer on Death deed (also known as a Ladybird Deed) for real estate. This deed allows you to transfer property ownership directly to a named beneficiary without undergoing probate.

However, vehicles and other personal property in Georgia cannot be passed through a TOD designation. Instead, such assets must be addressed in a Will or placed in a Trust.

What Are the Benefits of a TOD Account in Estate Planning? 

TOD accounts can complement your estate planning strategy in several important ways:

  • Quick Access to Funds – Your beneficiaries gain immediate access to important financial resources, which can help them cover funeral expenses or other urgent needs.
  • Cost Savings – Avoiding probate means avoiding costly legal fees and court expenses.
  • Maintained Privacy – Unlike probate, which is a public process, TOD transfers are private and do not go through court records.

What are the Drawbacks of Relying Solely on TOD Accounts? 

While the benefits of TOD accounts are clear, their drawbacks cannot be ignored:

  • Limited Scope – TOD accounts only address specific assets, leaving other items such as family heirlooms or untitled property unaccounted for.
  • No Contingencies – If a beneficiary predeceases you and no alternate is named, the asset may still have to go through probate.
  • No Guardianship for Minors – TOD accounts cannot name guardians for minor children. This critical aspect of estate planning can only be handled through a Will.

When Should You Combine a Will with TOD Accounts? 

For most individuals, the best approach is to combine TOD accounts with a formal Will. A Will ensures that all residual assets, personal belongings, and complex instructions are handled appropriately. By pairing a TOD account with a Will, you can:

  • Address assets not covered by TOD (e.g., vehicles, untitled property).
  • Establish guardianship for minor children.
  • Ensure family dynamics and multiple beneficiaries are considered fairly.

This holistic approach offers the efficiency of TOD accounts and the flexibility of a Will, giving you complete peace of mind.

TOD Accounts vs. Trusts – Which is Better? 

While TOD accounts can simplify certain aspects of estate planning, some families benefit more from a Trust. Here’s why:

  • Trusts Cover All Assets – Trusts allow you to include all your assets under one umbrella and can be tailored to your specific wishes.
  • Avoid Probate Completely – Trusts can keep your entire estate out of probate, not just specific accounts or real estate deeds.
  • Provide Control – With a Trust, you can establish conditions for asset distribution (e.g., releasing assets to a child when they turn 25).

For larger or more complex estates, a Trust may be the better long-term solution.

Is a TOD Deed Worth Considering in Georgia? 

Yes, but with limitations. While the newly introduced Transfer on Death deed in Georgia offers a valuable way to transfer real estate outside probate, there are situations where alternative solutions, such as a Trust, might be better.

Real estate transferred via a TOD deed does not give the beneficiary control until your death. If you need more flexibility or wish to maintain joint ownership during your lifetime, other tools might be more effective.

Final Thoughts on TOD Accounts and Estate Planning 

TOD accounts can be a fantastic tool for simplifying asset transfers and avoiding probate, but they aren’t a substitute for a solid estate plan. Pairing TOD accounts with a comprehensive Will ensures that all your assets, family members, and wishes are accounted for, reducing stress and confusion during an already difficult time.

At The Edwards Law Group, we can help you determine the right combination of strategies tailored to your specific needs. Whether it’s setting up a Transfer on Death deed in Georgia, creating a Trust, or drafting a detailed Will, our Atlanta Estate Planning attorneys are here to help. 

Contact our team today for a consultation and take the first step toward creating your ideal estate plan.