The Transfer at Death
When a sole owner dies, or the last surviving co-owner dies, the security passes to the surviving beneficiary or beneficiaries. The transfer on death (TOD) 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 provides proof of the owner's death. In most cases, a death certificate and identification are enough. 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. This means each person has an undivided interest. They will need to coordinate to split or sell the holdings.
If no named beneficiary survives the owner, the security does not disappear. It becomes part of the deceased owner's estate. A court then distributes it under the will or 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 to name contingent beneficiaries. Without a backup, the asset may go through the probate process the TOD designation was meant to avoid.
How This Connects to Your Broader Estate Plan
Many families use TOD registrations alongside beneficiary deeds for real estate. A beneficiary deed works the same way for a home or land. Recording the deed during the owner's lifetime sets up a direct transfer at death.
For community property held by married couples, the surviving spouse typically takes ownership first. The TOD designation then controls what happens after the second death. These tools work best as part of an overall estate plan that accounts for all assets.