Transfer on Death Concept

Last edited 16 days ago by Ted Broomfield

Summary: Transfer on death is a long-established legal procedure to transfer titled property after death. Transfer on death is relatively simple to establish and then to execute. The basic concept is that the testator, meaning the person planning for death, identifies specifically named individuals and types their names on forms designating those people as beneficiaries to receive the property, after the Testator’s death. If this procedure sounds familiar, it may be, because most checking, savings and brokerage accounts, as well as insurance policies work this way.

Transfer on Death

Transfer on death is a fairly modern, but, as of the date of this blog, a long-established technique for transferring property at the death of the Testator. A Testator is the word used to describe the person who is planning for property distribution at death.

In theory, and in many cases in practice, transfer on death is a relatively simple way to transfer property at the death of the Testator. Basically, the Testator types the names of the people that the Testator wants the property to be transferred to on the appropriate forms. Within a short amount of time after the beneficiary or beneficiaries produce evidence of the death and their own identifies, the title of the property, meaning ownership, is transferred to the beneficiary.

Benefits of Transfer on Death

The benefits of transfer on death include simplicity, quickness and cost.

Although consulting with an estate attorney is always recommended, many people feel sufficiently competent to identify the people that they want to pass property to, asking for or finding the correct forms, and typing the names and other required information onto those forms for submission, all without paying any professional adviser.

One of the most significant benefits in California of the transfer on death technique is that the property is transferred outside of the Probate Process. Probate is time consuming and can be very costly.

Downsides of Transfer on Death

The downsides of transfer on death include lack of flexibility, lack of post-mortem control and lack of transparency.

Lack of flexibility; specific individuals must be named, not classes

When a Testator uses transfer on death, they name specific individuals. However, circumstances can change. For example, imagine a young couple with one child. They can name that one child as the beneficiary for a transfer on death, but, if the couple gives birth to other children, those other children will not receive property distributions unless the transfer on death beneficiary form is changed. The technique of naming “class,” gifts, or gifts to a group of similarly situated people, like children, cannot be used with Transfer on Death.

Lack of post-mortem control; property transfers very shortly after death, with few or no limits

Another downside to transfer on death is lack of post-mortem control. One of the most common techniques to avoid probate is the Living or Revocable Trust. A Living or Revocable Trust is a Trust, or a means of both transferring property after death, but also securing, managing, and protecting property after death. By definition Trusts bifurcate, or split, the ownership of property into the legal title owner, who has the responsibilities of managing the property and the beneficial owner who is supposed to get the benefits of the ownership. A common technique with Living or Revocable Trusts is to create instructions that property is not to be distributed to a beneficiary until a certain age, or other measurable milestone is reached.

Transfer on death offers no such post-mortem control.

Lack of transparency, if there is no Trust or Probate, the beneficiary may not know about the property

For many reasons, estate planning is often done in silence without communicating the plan to the beneficiaries. If there is no Trust or Probate, which by definition require a person to perform an inventory and an accounting, then the beneficiary simply may not have any knowledge of the property.

Types of assets that may be transferred on death

Many types of assets may be transferred on death. People who have any personal interest in estate planning are often familiar with transfer on death, because they have named a beneficiary or beneficiaries on their bank accounts, such as checking, savings, or CDs. Almost all people with any kind of life insurance policy are familiar with the concept of pay on death, because they name specific individuals and specific percentages to pay with respect to the death benefit of a life insurance policy.

However, in California, transfer on death can be used for real property and vehicles, as well.

Should someone use transfer on death?

Whether someone should or should not use transfer on death in tier own estate plan is a personal and sensitive question.

Circumstances that make transfer on death more desirable is when the family and beneficiary group is fixed and stable, such as an individual or couple who are either certain or highly likely not to have other children or life partners that need be considered in estate planning. Other circumstances include relatively minor assets in a large estate that do not make up a significant portion of the value of the estate and do not represent property with sentimental value. Transfer on death can work for a testator who desires simplicity and does not feel the need for post-mortem control.

Conversely, circumstances that make transfer on death undesirable are when the family and beneficiary group are growing, either such as a young family or a single person whose estate plan may need to consider a future partner whose identify is not yet known.

In general, for many circumstances, I think Transfer on Death is ideal for financial assets like bank accounts, especially smaller bank accounts and vehicles. Transfer on Death for Vehicles can be a little complicated, so I suggest reading my blog on

Transfer on Death for Vehicles in California⁠

With respect to the relatively new transfer on death of real property, the decision is much more complex, and I recommend reading my blog on the

Risks of Transfer on Death or Real Property⁠

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