What is a beneficiary account for an inheritance transfer?

accounts. Adding a beneficiary on death can be a great first step in estate planning for those who do not need or are not yet ready to set up trusts or other more sophisticated estate planning strategies.

In simple terms, using a Transfer on Death (TOD) design is like adding a beneficiary to an account that does not normally designate a beneficiary. Most retirement accounts offer a beneficiary option, while TOD is used for brokerage or other non-retirement investment accounts.

When you use a TOD design, you specify who your assets will go to when you die. This can help you avoid a costly, stressful and time-consuming process''bequests.

Beneficiaries will be able to manage assets or receive information about the status of your investment accounts during your lifetime.

You can add a TOD design to both new and existing accounts. Typically, this will not require you to buy or sell securities. Adding a TOD design is important because you want to avoid taxation. Contact your financial advisor or brokerage firm for the necessary paperwork to add a death beneficiary to your investment accounts.

One example of the complicated use of a death beneficiary is the situation of a grandmother who wanted to help each of her 20 grandchildren in addition to inheritances from a trust fund, real estate and retirement''bills. The grandmother wanted to help her grandchildren while they were still alive, such as paying for college tuition, buying a new car, or even funding a semester abroad.