If you own certain kinds of government securities, you can name someone to inherit them without probate.
If you own certain kinds of government securities, including Treasury bills and notes and savings bonds, you can name someone to inherit them without probate.
Registration in Beneficiary Form
To do this, you must register ownership of the securities in "beneficiary" form. You simply register ownership in your name, followed by the words "payable on death to" and the name of your beneficiary. The beneficiary must be a person, not an organization. (31 C.F.R. Parts 315.6 and 353.6.)
If the beneficiary is a minor, you must specify that—for example, by writing "payable on death to Jasmine Martin, a minor." After your death, ownership will be transferred to the person you named.
As with corporate securities, you'll have complete control over these assets. You don't need the beneficiary's consent to sell or give away the securities, and you can name a different beneficiary at any time by filling out new ownership documents.
One significant limitation on adding a payable-on-death beneficiary is that there may be only one primary owner and one beneficiary. You can't name a payable-on-death beneficiary if the securities are co-owned by two or more people—you and your spouse, for example. In that situation, the best you can do is to create a right of survivorship, so that the surviving co-owner inherits the securities when the first co-owner dies. Then, the survivor could add a beneficiary designation.
EXAMPLE: Marilyn and her husband Richard buy Treasury bonds and notes, and hold title to their account as "Marilyn Vanderburg and Richard Vanderburg, with right of survivorship." Many years later, after Marilyn's death, Richard changes the title to add their adult daughter as the beneficiary. Now, the title is held as "Richard Vanderburg, payable on death to Melissa Vanderburg."
Naming Alternate Beneficiaries
You cannot name an alternate (contingent) beneficiary to inherit the bonds if your first choice does not survive you. So, if naming an alternate is important to you, think twice about using the beneficiary form of registration. If you want to name a specific alternate to inherit your government securities without probate, you'll need to use another probate-avoidance method, such as a living trust.
Before you get too concerned, though, weigh several factors, including:
- Your age, and that of your beneficiary. If your primary beneficiary died, do you think you would be able to handle the paperwork to name another beneficiary?
- The value of the securities. If the securities went through probate, would that impose a large expense on whomever inherits them?
- The person you've chosen as your residuary beneficiary of your will. If you're happy with that person as a backup beneficiary, you don't have a problem.
Buying Government Securities
If you want to buy government securities directly, not through a broker, you can do so online at www.treasurydirect.gov, which also offers lots of information about savings bonds and treasury securities.
You can also contact a Federal Reserve Bank servicing office. Every large city has one, as do a fair number of medium-sized cities. Ask for a Treasury Direct Tender package. It should contain a booklet called Buying Treasury Securities and copies of the forms you need.
FAQs
If you have a brokerage account, contact the broker for instructions. Most likely, the broker will send you a form on which you'll name beneficiaries to inherit your account. From then on, the account will be listed in your name, with the beneficiary's name after it, like this: "Evelyn M. Meyers, TOD Jason Meyers."
How do I name a beneficiary on TreasuryDirect? ›
To do this, you must register ownership of the securities in "beneficiary" form. You simply register ownership in your name, followed by the words "payable on death to" and the name of your beneficiary. The beneficiary must be a person, not an organization.
How to fill out beneficiary designation form? ›
Write the names of the main individual(s), entity (such as a charity, business, religious organization, funeral home, etc.), trust, or estate. You may name more than one. All secondary beneficiaries listed will receive EQUAL SHARES (equal amounts) of your benefit if ALL of the primary beneficiaries are deceased.
What is an example of a beneficiary name? ›
Life insurance beneficiaries can be individuals, such as a spouse or adult child, or entities, such as a trust. For example, if you have minor children, you may choose to establish a trust and name it as the beneficiary of your life insurance policy.
What is the disadvantage of TOD? ›
Lack of Resources To Pay Final Expenses
A significant downfall with relying upon TOD or POD account registration to administer your assets upon death is that there might not be remaining assets in your estate to cover such expenses.
Does a TOD avoid capital gains tax? ›
A transfer on death (TOD) bank account is a popular estate planning tool designed to avoid probate court by naming a beneficiary. However, it doesn't avoid taxes.
How do I name a beneficiary on an iBond? ›
Select the Beneficiary check box at the top. Under First-Named Registrant, fill in the Account Owner's information (Your information). Under Second-Named Registrant, fill in the Beneficiary's information.
What happens to a TreasuryDirect account when the owner dies? ›
For an estate that is being administered, the legal representative of the estate must open a TreasuryDirect account in the name of the estate in order to conduct transactions. The legal representative of the estate may then conduct any transactions that are available to an individual account owner.
What is the second-named registrant on TreasuryDirect? ›
Second-Named Registrant - The second person named in the registration of a security held in TreasuryDirect. In the example, "John Doe SSN 123-45-6789 WITH Joseph Doe SSN 987-65-4321," Joseph Doe is the second-named registrant.
How to write a beneficiary statement? ›
Remember the following when completing your Beneficiary Designation form: Clearly identify your beneficiary(ies), providing each beneficiary's full name, date of birth, Social Security number, address, and relationship to you. You can name primary and contingent beneficiaries.
Beneficiary Account Number: Enter the recipient's bank account number. Bank Name and Branch: Write the name of the bank where the beneficiary holds the account and the branch's name. IFSC Code of Beneficiary Bank: Fill in the IFSC code of the beneficiary's bank branch.
What is an example of naming a beneficiary by class? ›
class beneficiary designation. Instead of naming each child as a beneficiary in a life insurance policy one can say "all children of the insured," "all children of the marriage between Mike and Ethel" (if there are stepchildren and different plans have been provided for them).
What is the correct beneficiary name? ›
The primary beneficiary is the individual who is foremost in the list of receiving the benefit, as mentioned in the will of the deceased person. The deceased person specifically mentions the primary beneficiary's name in the will in his or her lifetime.
Who is the best person to name as beneficiary? ›
While it is most common for a spouse to be named as a primary beneficiary, as we've already discussed, you can of course name a child to be first in line to receive assets from your estate.
Are Social Security numbers required for beneficiaries? ›
Yes. Banks may require the beneficiary to provide a Social Security number (SSN) for monetary transactions. This requirement is intended to verify that funds are distributed to the correct designated individual(s) listed in a will, trust, insurance policy, retirement plan, annuity, or other contract.
How do I designate a beneficiary for stocks? ›
Ask the brokerage or mutual fund custodian for a T.O.D. form. Some companies also call these beneficiary designation forms. If you manage your own stock portfolio, there's a very easy way to make a gift to your favorite charity and build your own legacy.
Can you name a beneficiary on a stock account? ›
Your brokerage firm may provide TOD or other beneficiary documents in order to designate a beneficiary for your brokerage account. Designating a beneficiary can be very helpful, but be aware that a TOD plan or other beneficiary document supersedes your will.
Do you name a beneficiary on stocks? ›
If you have stocks in a brokerage account, you can name one or more individuals as beneficiaries. This means that once you pass away, your beneficiaries will inherit the brokerage account in its entirety, including any stocks you held at the time of your death. Don't miss out on news that could impact your finances.
Can you name beneficiaries on stocks? ›
The Uniform Transfer on Death Securities Registration Act lets owners name beneficiaries for their stocks, bonds, or brokerage accounts.
