Transfer on Death (TOD)

B is correct. A TOD (Transfer on Death) designation allows Robert to maintain complete control and ownership during his lifetime while ensuring the account transfers directly to Sarah at his death, bypassing probate. Robert can trade securities, withdraw funds, or change the beneficiary designation at any time without Sarah's knowledge or consent. Sarah has no current ownership rights and cannot access the account until Robert dies.

A is incorrect because JTWROS gives Sarah immediate equal ownership and access rights to the account. Robert would no longer have sole control, as Sarah could withdraw funds or trade securities without his permission. Additionally, Robert cannot unilaterally change ownership without Sarah's consent. C is incorrect because tenants in common gives Sarah immediate partial ownership interest, not deferred rights at death. This also complicates control and does not match Robert's goal of maintaining sole authority. D is incorrect because while a revocable trust avoids probate, appointing Sarah as trustee gives her management authority over the account, which conflicts with Robert's desire for complete personal control.

C is correct. The fundamental characteristics of TOD accounts are that beneficiaries have no ownership rights, access, or control until the account owner's death, and the account bypasses the probate process entirely. Upon death, assets transfer directly to the named beneficiary outside of the will and probate court.

A is incorrect because TOD beneficiaries have NO current rights during the owner's lifetime. They are merely designated to receive the assets at death and cannot access, trade, or control the account before that time. B is incorrect because avoiding probate is one of the primary benefits of TOD designations. The account transfers directly to the beneficiary by operation of the registration, not through the probate court process. D is incorrect because the account owner can change or revoke TOD beneficiary designations at any time without the beneficiary's knowledge, consent, or approval. This flexibility is a key feature that distinguishes TOD from joint ownership.

B is correct. TOD designations can be changed, modified, or revoked at any time by the account owner without beneficiary consent or court approval. Maria simply needs to complete a new beneficiary designation form with her custodian to add her daughter and adjust the distribution percentages (changing from 50%/50% to 33.33%/33.33%/33.33%). The beneficiaries have no say in this decision and may not even be aware of the change.

A is incorrect because TOD beneficiaries have no current ownership rights and therefore no approval authority over changes to the designation. The owner maintains unilateral control to modify or revoke beneficiary designations at will. C is incorrect because TOD registrations are established and modified through the account custodian, not through probate court. Probate is avoided entirely with TOD accounts. D is incorrect because TOD designations are specifically designed to be flexible and changeable. The owner can modify beneficiaries as many times as desired without closing or reopening accounts.

C is correct (the EXCEPT answer). TOD beneficiaries do NOT have current ownership rights, access to account information, or any control during the owner's lifetime. They are simply designated to receive the assets upon the owner's death. Beneficiaries cannot request statements, tax information, or account activity reports until after the owner dies and the account transfers to them.

A is accurate: Probate avoidance is a primary benefit of TOD designations. Upon death, securities transfer directly to the named beneficiary by operation of the registration, outside the will and probate court process. B is accurate: The owner maintains complete control during their lifetime, including full trading authority, withdrawal rights, and the ability to change or revoke beneficiary designations without restriction. D is accurate: TOD registrations are available for individual and joint securities accounts in most U.S. states and are governed by the Uniform Transfer on Death Securities Registration Act adopted by most jurisdictions.

D is correct. All four statements accurately distinguish these account registration types.

Statement 1 is TRUE: TOD preserves sole ownership for the account holder during their lifetime. The beneficiary has zero current rights and cannot access the account or receive information until death occurs. In contrast, JTWROS creates immediate equal ownership for all named owners, each with full access and control rights from the moment the account is established.

Statement 2 is TRUE: Both TOD and JTWROS avoid probate because assets transfer automatically by operation of the registration (TOD to beneficiary, JTWROS to surviving owner). However, TIC does NOT avoid probate. When a TIC owner dies, their percentage ownership interest becomes part of their estate and must go through probate before distribution to their heirs.

Statement 3 is TRUE: TOD owners have unilateral authority to add, remove, or modify beneficiary designations at any time without notice or consent from beneficiaries. With JTWROS, changing ownership structure requires consent from all current owners because each owner has immediate vested ownership rights that cannot be unilaterally eliminated.

Statement 4 is TRUE: TIC ownership interests pass according to the deceased owner's will (or intestacy laws if no will) as part of their probate estate. JTWROS includes an automatic right of survivorship, meaning the deceased owner's interest automatically transfers to the surviving joint owner(s) outside of the will and probate, in equal shares among survivors.