What These Definitions Cover
Before any transfer-on-death (TOD) registration can work, the law has to define what it applies to. This statute does that groundwork.
It explains what counts as a "security" under the TOD framework. The definition is broad. Stocks, bonds, brokerage accounts, mutual fund shares, and ownership interests in a business all qualify.
"Security" means any share, participation or other interest in property, in a business or in an obligation of an enterprise or other issuer and includes a certificated security, an uncertificated security and a security account.
A.R.S. § 14-6301(4)The statute also defines "beneficiary form." This means a registration that names the current owner and the person who will take over at death.
The owner fills out a beneficiary form with a broker or transfer agent. As a result, a direct line of succession is set for that asset. No probate is needed for assets with a valid TOD registration.
Security Accounts and What They Include
The law defines "security account" broadly. It covers brokerage accounts, reinvestment accounts, and cash balances held alongside securities. Trust company custody accounts also qualify.
The definition also includes dividends, interest, and earnings credited to the account.
"Security account" means: (a) A reinvestment account associated with a security, a securities account with a broker, a cash balance in a brokerage account, cash, interest, earnings or dividends earned or declared on a security in an account, a reinvestment account or a brokerage account, whether or not credited to the account before the owner's death.
A.R.S. § 14-6301(5)(a)How TOD Registration Fits Into Estate Planning
This broad definition matters. It means nearly every type of investment account can have a TOD beneficiary designation. When done correctly, these assets go directly to the named beneficiary and skip probate.
TOD registration is one of several tools for passing assets outside of probate. Others include POD bank accounts, beneficiary deeds for real estate, and living trusts.
When a TOD registration names multiple beneficiaries, the account is usually split equally. The registration can specify a different split. A death certificate is usually needed to complete the transfer after the owner passes away.