One of the biggest questions families ask is simple but important: What’s the best way to pass assets to loved ones after we’re gone? Two common tools are Transfer-on-Death (TOD) designations and trusts. Both can work well—but they do very different jobs.
Transfer-on-Death (TOD): Simple and Direct
A Transfer-on-Death designation lets you name who receives a specific account when you die. Think of it like naming a beneficiary. When you pass away, the account goes directly to that person—no probate, no court delays.
TODs are popular because they’re:
- Easy to set up
- Low cost
- Fast for beneficiaries
But here’s the catch: TODs offer no control after death. The money goes outright to the beneficiary, all at once. There are no rules, no protections, and no guidance. That’s fine for simple situations—but it can be risky if someone isn’t ready to manage money or if family dynamics are complicated.
Trusts: More Control, More Protection
A trust is a legal plan (drawn up by an attorney). The trust creates a legal entity that holds assets and follows instructions you set. You decide who gets what, when they get it, and how it’s managed. A trustee carries out those wishes.
Trusts are especially helpful when:
- You want to spread payments over time
- Beneficiaries are minors
- Family situations are blended or complex
- You want privacy and long-term structure
Trusts also avoid probate and can step in if you become unable to manage your finances. They take more effort to set up, but they provide clarity and protection when it matters most.
Which Is Better?
There’s no one-size-fits-all answer.
- TODs are great for simple, single accounts.
- Trusts work best when control, coordination, or protection is needed.
- Many families use both together—and that’s often the smartest move.
The key is making sure everything lines up. If a TOD says one thing and your trust says another, the TOD usually wins. That’s why regular reviews matter.
Bottom Line
The “best” way to transfer assets depends on your family, your goals, and how much control you want after you’re gone. A little planning now can save your loved ones a lot of stress later—and make sure your wishes are actually carried out
At Masters Financial Group we have assisted families with estate planning issues like this for over 25 years. We work with attorneys to assist our clients with all their estate planning needs. From figuring out the best tools, titling, wills, trusts for their situation to getting the documents drawn up and put in place. If you have questions please reach out to us to schedule a call, Zoom or office visit.
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David Conley, CFP
Phone 864-293-7452