The Required Language
Beneficiary form registration does not need a lengthy legal document. Arizona law keeps it simple. The registration includes specific words or short forms that signal the designation.
The owner's name comes first. The designation language follows. The beneficiary's name comes last.
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. § 14-6305For example, a financial institution might format the registration as "John Smith TOD Jane Smith." That notation tells the institution what to do when the owner dies. It transfers the security directly to the named beneficiary.
TOD vs. POD: Is There a Difference?
The terms work the same way in this context. However, industry practice draws a practical line between them.
"Transfer on death" (TOD) is typically used for investment and brokerage accounts. These hold stocks, bonds, and mutual funds. "Pay on death" (POD) is more common for bank accounts like checking, savings, and certificates of deposit.
Both reach the same goal: a direct transfer to the beneficiary at death. A POD or TOD account passes outside the estate and bypasses probate.
Keeping Your Designations Current
Outdated designations can cause serious problems. Naming a former spouse or a person who has already died can create delays and legal disputes.
If a beneficiary dies before the account owner, the asset may fall back into the estate. It would then go through probate. Transfer on death deeds for real property work the same way.
You can change the beneficiary at any time without cost or court approval. A regular review of all TOD and POD designations helps prevent these problems.