Transfer-on-Death (TOD) designations are an increasingly popular estate planning tool in Florida, allowing individuals to pass certain assets directly to beneficiaries without the delay and expense of probate. Traditionally used for bank and investment accounts, TOD designations can also be structured for ownership interests in limited liability companies (LLCs), providing a straightforward way to transfer control or value upon death. For many Floridians, this approach offers flexibility, privacy, and efficiency; key advantages in simplifying estate administration and preserving family assets.
While TOD designations are not a substitute for a comprehensive estate plan, they can complement a Florida Last Will and Testament or Revocable Living Trust by addressing assets that might otherwise pass through probate. For example, adding a TOD or Payable-on-Death (POD) beneficiary to a financial account, or including a TOD provision in an LLC Operating Agreement, ensures those assets transfer quickly and directly to your chosen heirs. This simple step can help minimize court involvement, reduce administrative costs, and provide peace of mind that your wishes will be honored efficiently after your passing.
Let us take a closer look at how these tools work, and how they can be expanded to protect both personal and business assets.
What Does “Transfer on Death” Mean in Florida?
A Transfer on Death (TOD) designation allows you to name a beneficiary who will automatically inherit the asset upon your death. Unlike joint ownership, the TOD beneficiary has no rights or control while you are alive. You retain the full power to sell, close, or modify the account at any time. The transfer only becomes effective at your passing.
In essence, a TOD is a non-probate beneficiary designation that ensures a smoother, faster transition of assets to loved ones.
Common TOD and POD Options in Florida
- Bank Accounts
Under Florida law, you can add a Payable on Death (POD) designation to your bank accounts, including checking, savings, and certificates of deposit (CDs). At your death, the bank transfers the funds directly to your designated beneficiary once they provide a death certificate and proper identification. - Stocks, Bonds, and Brokerage Accounts
Florida has adopted the Uniform Transfer on Death Securities Registration Act (Fla. Stat. §§ 711.50–711.512). This allows investment accounts, including stocks, bonds, and mutual funds, to be registered with a TOD designation, passing directly to the named beneficiary without probate. - Real Estate
Unlike some states, Florida does not currently recognize Transfer-on-Death deeds (also called “beneficiary deeds”). Instead, Florida residents may use alternatives such as:- Lady Bird Deeds (Enhanced Life Estate Deeds) – allow you to retain control and ownership during life, then automatically transfer the property at death.
- Revocable Living Trusts – hold real estate and distribute it directly to beneficiaries without probate.
NEW: Using a TOD for LLC Interests in Florida
Many Florida residents also hold assets through family-owned LLCs, such as real estate, investment portfolios, or business ventures. Including a Transfer on Death (TOD) provision in the LLC’s Operating Agreement can ensure a seamless transition of your membership interest without probate or disruption to business operations.
How It Works
Under the Florida Revised Limited Liability Company Act (Fla. Stat. Chapter 605), membership interests are considered personal property. This allows an Operating Agreement to specify what happens upon a member’s death, including naming a “beneficiary” or “successor member” who automatically receives the interest.
A TOD clause might read:
“Upon the death of a Member, the Member’s ownership interest shall automatically transfer to the designated Beneficiary as set forth in this Agreement, without the need for probate, subject to any necessary filings or tax requirements.”
This approach:
- Avoids court involvement and probate administration of the deceased member’s interest;
- Maintains business continuity;
- Clarifies ownership transitions and voting rights; and
- Coordinates with your overall estate plan and beneficiary designations.
It is important to note that such provisions must be carefully drafted to comply with the LLC’s governing documents and Florida law. Some operating agreements may require consent of other members or impose buy-sell restrictions. Your attorney can tailor the language to fit your LLC’s structure, tax goals, and family needs.
Benefits of Using TOD and POD in Florida
- Avoids Probate – Florida probate can be time-consuming and costly. TOD and POD designations allow certain assets to transfer directly to beneficiaries.
- Simple to Set Up – Most can be completed by filing a short beneficiary form with your financial institution or updating your operating agreement.
- Flexible and Revocable – You may change or revoke TOD/POD designations anytime while you are competent.
- Keeps You in Control – Beneficiaries have no ownership rights during your lifetime.
Important Considerations
- TOD/POD Override Your Last Will: These designations control over conflicting terms in your Last Will & Testament.
- Multiple Beneficiaries: Not all banks or brokerages allow multiple beneficiaries – confirm with each institution.
- Taxes Still Apply: TOD/POD avoid probate but not estate or income taxes.
- Life Events: Always update your designations after marriage, divorce, or the birth of children.
- Business Impact: If your LLC Operating Agreement includes a TOD clause, ensure it aligns with your broader estate plan and does not conflict with buy-sell provisions or tax elections.
Conclusion
For Florida residents, Transfer on Death and Payable on Death designations offer a streamlined, cost-effective way to pass assets outside probate. By extending the TOD concept to your LLC Operating Agreement, you can also protect business continuity and avoid unnecessary legal delays.
Whether you are updating your financial accounts, real estate, or business interests, it is wise to coordinate your TOD/POD designations with your Florida estate planning attorney to ensure everything works together as intended.
The foregoing is a brief and general overview of the topic and the need for specific and experienced legal and tax advice is emphasized.
If you have any additional questions regarding the foregoing or have any legal issues or concerns, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.