Transfer on death (TOD) accounts go by many names. Sometimes they are referred to as Totten trusts or as payable-on-death accounts. What a TOD does, though, is provide a means for a person in Colorado to pass on assets to their spouse or another loved one in a manner that is simple, making them an important and attractive part of a well-rounded estate plan.

While state law varies, in general joint bank accounts, investment accounts, a home or an automobile will allow a transfer of the account or asset upon the death of one joint owner to a TOD beneficiary. These beneficiaries can include a surviving spouse, children and other loved ones. In general, when a surviving spouse is a beneficiary, he or she will have a claim to 50 percent of the account. Oftentimes when someone other than a surviving spouse is to be a beneficiary to the TOD account, a person’s spouse must provide consent to such a transfer in writing.

Transferring control of a TOD account is relatively straightforward. Again, while state law or the language of the TOD agreement varies, in general a beneficiary can take control of his or her share of the account by providing a photo ID and the death certificate to the person or entity that is acting as the custodian of the account.

However, because a TOD account still constitutes part of the deceased’s estate, the account may be taxed, and it can still be subject to claims by creditors. Because TOD account custodians can be personally liable if taxes or creditor claims aren’t paid, they will proceed with caution, and may request a court order or additional proof before transferring the TOD account to a beneficiary.

This is only a very basic overview of TOD accounts. Those interested in TOD accounts will want to research how these accounts operate before proceeding. An examination of state law may be necessary to determine whether a TOD account should be part of your estate plan.