Reference · US taxation

The TOD designation (transfer on death)

The simplest planning tool for a US brokerage account — and the precise limits of what it does.

The TOD (transfer on death) is a beneficiary designation specific to US state law: the holder of a securities account designates in advance the person or persons who will become its owners at their death, directly, without going through the courts. For a non-US investor holding an account at a US broker, it is, when it is accessible to them, the simplest planning tool available — provided you understand exactly what it does, what it does not, and first check that it is open to you (see below). (The tax procedure still due at death — 706-NA, transfer certificate — is described on the procedure page.)

General information, not legal or tax advice. How a TOD designation interacts with the inheritance law of the decedent's country must be validated by a qualified professional.

What the TOD is

The mechanism comes from a uniform law (the Uniform TOD Security Registration Act), adopted — sometimes with variations — by nearly all US states. It is state law, not federal law, that governs how securities are registered; the uniform law even provides that a designation is presumed valid, under contract law, where it is not in force. In practice: the account is registered in “beneficiary form” — the holder's name, followed by “TOD” and the name of the beneficiary or beneficiaries.

Three properties, written into the statutes:

• No effect during the holder's lifetime. The designation gives the beneficiary no right over, or sight of, the account while the holder is alive. The holder remains sole owner and sole in control.
• Revocable at any time. The holder can change or cancel the designation whenever they wish, without the beneficiary's consent or even knowledge.
• Automatic transfer at death. On the death of the holder (or of the last co-holder), ownership of the securities passes to the surviving designated beneficiaries — without any court involvement.

What the TOD brings

• Avoiding probate. Without a designation, a US securities account of a foreign decedent is in principle subject to probate: a court administration of the account by a US court — a slow, costly process, conducted at a distance for non-US heirs. The TOD short-circuits it: the broker transfers directly to the designated beneficiary.
• A fallback cascade. Most institutions let you designate primary beneficiaries (with percentage splits) and contingent beneficiaries, who receive only if the primaries predecease.
• Free and reversible. The designation is a simple registration instruction to the broker; it costs nothing, locks nothing, and in no way alters the management of the account.

What the TOD does not do

This is the most misunderstood point, and it deserves to be said plainly:

• The TOD is not guaranteed to non-US holders. The uniform law leaves each institution free to set the conditions for accepting beneficiary-form registrations — and in practice, some US brokers offer no beneficiary designation on their accounts at all, and others refuse it to holders who do not reside in the United States. The account then follows the ordinary probate route at death: a certified death certificate, then a document establishing the authority of the heirs or the executor. This route is less daunting than is often feared: some institutions accept foreign probate documents (apostilled and translated into English), reviewed case by case, without requiring a US court proceeding — but that is each custodian's policy, not a right. The transfer certificate, however, remains due in all cases. Before building your planning on a TOD, obtain written confirmation from your broker — on the designation AND, failing that, on the probate documents it will accept — and keep the reply. (Last checked: June 2026.)
• The TOD does not erase US estate tax. The statutes say so expressly: even transferred outside probate, the account remains counted in the decedent's estate for tax purposes. The $60,000 threshold, the obligation to file the 706-NA and the transfer certificate apply exactly as if there were no TOD. (See the procedure page.)
• The TOD can make the beneficiary the “filer”. US tax law provides that, absent an executor appointed and acting in the United States, any person in possession of the decedent's property is treated as executor — so it is the TOD beneficiary themselves who bears the obligation to file the 706-NA and to request the certificate.
• The TOD does not replace a will. It covers only the designated account. And it works alongside the inheritance law of the decedent's country, not in its place: for the US broker, the designation prevails over the will for that account; but the inheritance rules of the decedent's country (reserved shares for certain heirs, hotchpot, spousal rights) may give the other heirs claims to assert among themselves over the transferred value. This interaction depends on each national law — precisely the point to lock down with a professional (a notary or counsel versed in international estates), ideally consistent with the will.

The beneficiary's path at death

In practice, on the holder's death, the designated beneficiary must:

1. Notify the broker and provide the death certificate (with English translation) along with the requested identity documents — each institution publishes its own list of documents.
2. Open an account in their own name (often at the same institution) to receive the re-registered securities; a non-US beneficiary provides their non-resident tax documentation at this point. Check during the holder's lifetime that the institution opens accounts to residents of the beneficiary's country — eligibility depends on the acceptance policies of the moment, and it is the link no one thinks to test until they need it.
3. Complete the US tax procedure: file the 706-NA if the $60,000 threshold is crossed, then request the transfer certificate — it is this certificate that authorizes the institution to actually release the securities. (Detail: the procedure and Form 706-NA pages.)
4. Receive the securities, then dispose of them (hold, sell, transfer).

Step 3 is the longest; steps 1-2 can be prepared during the holder's lifetime (the beneficiary knows they are designated, knows the institution, and knows what documents will be required).

Good practices

• Check accessibility, then designate and keep it up to date. The first step is not the form but written confirmation that the institution accepts the designation for a non-resident holder (see “What the TOD does not do”). Then: a stale designation (predeceased beneficiary, changed family situation) is worse than none — review designations at each life event, and provide contingent beneficiaries.
• Consistency with the will. Have the designation recorded in the estate file (notary, will) so that the whole — US accounts, national estate — forms a coherent, non-contradictory set.
• Name the accounts in the estate file. Whether or not the TOD is available, expressly designating the foreign account and its recipient in the will (or the national estate instrument) removes all ambiguity for the heirs and for the custodian alike — and it is the document the institution will ask for anyway in the absence of a TOD.
• Inform the beneficiary. The mechanism only works quickly if the beneficiary knows the account exists, with whom, and what they will have to do.
• Prepare the receiving account in advance. The safest version of the previous check: where the institution allows it, the beneficiary opens their own account during the holder's lifetime — with their own funds, even token ones. Eligibility ceases to be a promise and becomes an established fact, the identity check happens calmly rather than in the midst of grief, and when the day comes only the transfer of the securities to an already-living account remains.
• Do not confuse civil speed with fiscal release. The TOD settles the destination of the securities within weeks on the broker's side; their release awaits the transfer certificate. Preparing the tax file ahead (documents, date-of-death values) shortens the only compressible delay.
• Substitution remains the root option. For anyone who wants to spare their heirs all this machinery, holding the exposure through non-US funds (UCITS) removes the US-source qualification — hence the procedure itself. (See the procedure page, substitution section.)