Pennsylvania estate planning primarily involves the transfer of assets upon the death of an individual. Transferring assets can be achieved through a Pennsylvania Will or Pennsylvania Trust, through beneficiary designations or by operation of law, such as a joint tenancy.
In addition to these types of transfers, another option available in Pennsylvania is the Transfer on Death or “TOD” designation.
Pennsylvania has adopted the Uniform Non-Probate Transfers on Death Act. Assets subject to the Act can be designated as “TOD.” The Act does not apply to real estate and is often used for bank accounts. Pennsylvania has also adopted the Uniform Transfer On Death Security Registration Act, which allows for securities to be labeled as transfer on death (“TOD”) or payable on death (“POD”).
Upon the death of the owner of an account or security with a TOD or POD designation, ownership passes to the named beneficiaries without probate. This has the same effect of an asset passing to a joint tenant. Unlike a joint tenant, the transferor may change his or her mind and revoke the transfer on death provision without obtaining consent from the person who would inherit at the time of death.
Both of these Acts allow for a simple approach to transfer accounts or securities on death; however, without proper Pennsylvania estate planning, there could be problems. For example, if a person wishes to transfer all of his assets to his two children equally, the person could create a Will naming both children as equal beneficiaries. If the person registers his or her stocks in TOD with just one child, then the other child will not receive half of the stocks, even though the decedent intended for both children to split the stocks equally.
Proper Pennsylvania estate planning is important for simple and complex estates. It is always unfortunate when the beneficiaries do not receive what the decedent may have intended due to poor planning.