Perhaps the most convenient way to transfer property is simply registering the asset you wish to transfer as “transferrable on death” or “payable on death.” In California, a person can complete a transferrable on death registration form indicating who should receive the account or asset once the account holder is deceased.
Payable-on-death designations in savings accounts or CDs are good examples of this. The designated beneficiary receives the funds upon the principal’s death but otherwise has no control over the account. Another common example is the transferrable on death registration for securities. In California, a stock or bond can include this designation on a form that accompanies the purchase. At death, the beneficiary communicates directly with the brokerage company to obtain the stock. The stock does not go through the probate process and there is no court supervision.
Despite its ease of execution, these transferrable upon death designations have one dire pitfall – they are easy to forget about. For example, after a divorce, the desired beneficiary may change but, if the designation is not changed, the transfer will occur as stated in the documents immediately upon death.
If the intended beneficiary pre-deceases the account holder, the transfer upon death cannot take place and the asset enters the probate process. This all serves to underline the importance of keeping transferable upon death designations up-to-date. If you would like to review your accounts to determine whether they may include a transferrable upon death designation, please contact us at (626) 696-3145.
