The Transfer at Death
The whole point of registering a security in beneficiary form is what happens at this moment: the owner's death. When a sole owner dies, or when the last surviving co-owner dies, the security passes to whichever beneficiary or beneficiaries are still alive. The transfer happens by operation of law, outside of probate.
On death of a sole owner or the last to die of all multiple owners, ownership of securities registered in beneficiary form passes to the beneficiary or beneficiaries who survive all owners.
A.R.S. § 14-6307(A)To complete the transfer, the beneficiary typically needs to provide proof of the owner's death and comply with whatever requirements the financial institution has in place. In most cases, a death certificate and identification are sufficient. The institution then reregisters the security in the beneficiary's name.
Multiple Beneficiaries and the Fallback Rule
When more than one beneficiary survives the owner, they hold the security as tenants in common until it is formally divided. This means each beneficiary has an undivided interest, and they will need to coordinate with the financial institution to split or liquidate the holdings.
There is also a straightforward fallback: if no named beneficiary survives the owner, the security does not disappear. It becomes part of the deceased owner's estate and is distributed according to their will or, if there is no will, through intestate succession.
If no beneficiary survives the death of all owners, the security belongs to the estate of the deceased sole owner or the estate of the last to die of all multiple owners.
A.R.S. § 14-6307(C)This fallback is one reason it is important to name contingent beneficiaries whenever possible. Without a backup, the asset may end up going through the very probate process the TOD designation was meant to avoid.
