Transfer on Death (TOD) accounts

Posted By: GrannieTwo

Transfer on Death (TOD) accounts - 05/12/20 04:09 PM

Can anyone advise me what documentation we would need regarding a TOD? We have a sole proprietorship customer who is gravely ill. An attorney is helping with estate planning and asked what we need for documentation. We do not have a trust department or a financial planner on staff. Has anyone had any experience with this and could help me out? Thanks!!
Posted By: rlcarey

Re: Transfer on Death (TOD) accounts - 05/12/20 04:15 PM

I do not understand - they want to set up a TOD? If the person is incapacitated and does not have a POA that would be broad enough to allow someone to take that action (after review by your legal counsel) I am not sure there is a solution at this point. You should tell them what you would require - other than that, they need their own legal counsel. The fact that the account is for a sole proprietorship really has no impact on the situation - it is just the person.
Posted By: BrianC

Re: Transfer on Death (TOD) accounts - 05/12/20 04:17 PM

It sounds like they're trying to name a beneficiary on the account.

Have legal counsel review the applicable Illinois statute to verify that unlike a corporation or partnership, a sole proprietor can name a beneficiary.

If it is permissible under state law, wouldn't you just need a new signature card?
Posted By: GrannieTwo

Re: Transfer on Death (TOD) accounts - 05/12/20 06:18 PM

Thank you both. Yes, we have been discussing with our attorney and yes we are going to need updated signature cards for the checking and savings. We have questions for our customer's attorney and are waiting to hear back. Thank you again for your input!
Posted By: John Burnett

Re: Transfer on Death (TOD) accounts - 05/12/20 09:01 PM

Just a note FYI: "Transfer on Death" (TOD) is a term normally associated with registered securities and brokerage accounts. Bank accounts that call for the balance to be paid to a beneficiary upon the death of the last surviving account owner are typically called "Payable on Death" or "Pay on Death" (POD) accounts or Totten Trust (Trustee for) accounts. When you click on the link Brian provided, you'll see that Illinois uses both "Trustee" and "Payable on Death" terms.
Posted By: lilbo52

Re: Transfer on Death (TOD) accounts - 11/05/20 04:48 PM

I have always been told that an account a sole proprietor can NOT have a POD?
Posted By: rlcarey

Re: Transfer on Death (TOD) accounts - 11/05/20 05:11 PM

A sole prop account is held by an individual. There is no mention of sole prop accounts in the IL statutes. I would be asking whoever is always telling you that for their source of their information.