A transfer on death account passes directly to beneficiaries you designate but lets you keep control over the account now. By Kimberly Lankford, Contributing Editor July 10, 2015 I need to designate a beneficiary for my brokerage account. Is a transfer on death account a better option than adding a joint owner to my account or including the account in my will?See Also: 4 Key End-of-Life Documents to Get in Order Life insurance, IRAs, 401(k) plans and other retirement accounts pass directly to the beneficiaries you designate outside of your will. Brokerage accounts, on the other hand, generally pass to your beneficiaries through your will and must go through probate first, which can be time-consuming, public and expensive in some states. A transfer on death (TOD) registration is a way to designate beneficiaries for your brokerage account so the money will pass directly to them and avoid probate. If you add a joint owner, that person will inherit the account outside of probate but can also change the investments and access the money while you’re alive. Joint accounts are also subject to the claims of both owners’ creditors. With a TOD, you maintain total control over the account and can change the beneficiary designation at any time. A TOD makes it very clear who inherits the account, rather than the account becoming one of many assets passed through your will. “It can avoid disputes,” says Gerri Walsh, senior vice president of investor education for Finra, an independent regulator for securities firms. “If you have the account set up with a designated beneficiary, that trumps whatever is in the will.” Advertisement If you want to split your estate among several beneficiaries, you may want to transfer the account through your will instead. Say you have three children and want to leave them equal shares of your estate. You could make one the TOD beneficiary of your brokerage account and leave comparable amounts of money to the other children. But if the brokerage account increases or decreases in value before you die, that child could end up inheriting a very different amount than the siblings. With a will, on the other hand, you can split up the total assets equally. If you have more complicated wishes – such as if you want your heirs to use the money for a particular purpose or not to receive the funds until a certain time – you may want to set up a trust instead, says Eleanor Blayney, a certified financial planner and consumer advocate for the CFP Board. For more information, see Putting Your Trust in Trusts. Contact your brokerage firm if you’d like to set up a TOD designation for your account. Most states have similar TOD rules (Louisiana and Texas do not offer this option). If you move to another state, ask your brokerage firm if you need to make any changes. For more information about TOD designations and other ways to transfer your brokerage account to your beneficiaries, see Finra’s investor alert Plan for Transition: What You Should Know About the Transfer of Brokerage Account Assets on Death. For more information about estate planning options, see 8 Smart Estate Planning Steps to Die the Right Way. Got a question? Ask Kim at firstname.lastname@example.org.