The Required Language
Registering a security in beneficiary form does not require a lengthy legal document. Arizona law keeps it simple: the registration itself includes specific words or abbreviations that signal the beneficiary designation. The owner's name comes first, followed by the designation language, followed by the beneficiary's name.
Registration in beneficiary form may be shown by the words "transfer on death" or the abbreviation "TOD" or by the words "pay on death" or the abbreviation "POD" after the name of the registered owner and before the name of a beneficiary.
A.R.S. § 14-6305In practice, this means your brokerage or financial institution will format the registration along the lines of "John Smith TOD Jane Smith." That notation tells the institution exactly what to do when the owner dies: transfer the security directly to the named beneficiary.
TOD vs. POD: Is There a Difference?
The terms are functionally interchangeable in this context, but industry practice draws a practical line. "Transfer on death" (TOD) is typically used for investment and brokerage accounts holding stocks, bonds, and mutual funds. "Pay on death" (POD) is more commonly associated with bank accounts like checking, savings, and certificates of deposit. Both accomplish the same goal: a direct transfer to the beneficiary at death, bypassing probate. The important thing is that the designation is in place and the beneficiary information is current. Outdated designations, such as naming a former spouse, can create serious complications that a periodic review of your accounts can easily prevent.
