What are the advantages and disadvantages, if any, of using a transfer of death beneficiary designation?

You need to talk to a probate attorney in your state to get specific answers to these questions. Generally speaking, a beneficiary designation does avoid probate, with regards to that specific asset. However, probate is usually necessary if there are any assets still in the decedent's name at his or her death. One account is unlikely to increase or decrease the ultimate cost, but I have seen families avoid probate altogether because everything the decedent owned transferred before death or automatically at death. This saved those families a few thousand dollars in attorneys' fees and court costs. An estate is unlikely to use accounts that passed outside of probate to pay estate expenses. However, your state may allow creditors to reach non-probate assets if there is not enough money in the estate to pay their bills. The government may also have this ability. Assets may be counted for the purposes of determining whether estate taxes apply even if they do transfer automatically at death. There may be some tax benefits to naming a beneficiary versus allowing the assets to transfer through the estate. It is possible to actually name a trust or Will as beneficiary in many cases. If there is a trust or testamentary trust controlling distributions/limiting access to the estate, it can be beneficial to name the trust or Will as beneficiary of accounts. This can prevent a young beneficiary from receiving a large lump sum with no restrictions. This process is very complicated when it comes to IRAs, but fairly simple for most other accounts.

I think the main advantage is that transferring those assets is (presumably) fairly easy, and most likely less expensive than probate or trust administration. The other considerations would be: 1. Keeping track of the various designations. What if you change your mind on your beneficiary - you will need to go back to each institution and make sure the TOD/POD is updated. Keeping track of all that might be difficult. 2. Managing the asset/account if you become incapacitated. One of the big advantages of setting up a trust to hold and manage your assets is that the likelihood of court involvement (guardianship/conservatorship) is greatly reduced in the event of incapacity. If you rely on a TOD/POD designation to transfer the asset, then you are relying on either a Power of Attorney (if it exists) or the court to name someone to assist if needed. 3. Lack of privacy if you become incapacitated. You mentioned privacy as one reason to avoid probate. However, again, if you are incapacitated and end up in the probate court under a guardianship/conservatorship, that privacy may be lacking. Frankly, estate planners often refer to using TOD/POD as "poor-man's estate planning." There are absolutely circumstances which can benefit from judicious use of the designations, but relying on them solely as the only "estate planning" that has been done is probably not wise. Hope this helps.

Here are some considerations. 1- First and foremost, if you are going to have a will admitted to probate and an estate opened, what liquidity will be used to pay the Personal Rep and his or her lawyer? And your bills and any claims? If the TOD money is all "gone" into the pockets of the heirs then the PR may be stuck with a problem. This pops up a lot with real estate, where the house is individually owned but bank accounts are all gone already. 2-- If you want to do something more complicated than just giving someone the money outright then TOD is not for you. For example, it is unsuitable where the heirs are minors, ie, kids. For that you need a will and probably a will that sets up a testamentary minor's trust; or perhaps an intervivos "living" trust to hold the account in the first place. 3-- If the TOD beneficiaries are different from probate or estate heirs, then your estate heirs may be picking up the tab for the TOD recipient's money if subject to Indiana inheritance tax, or, even in some cases, income tax; and also potentially other creditor claims lodged with estate. They may not think that is fair and you may not have ever considered it. I have yet to meet a non-lawyer who is cognizant of this issue and the non-lawyer "planners" who are constantly advising people to "avoid probate" generally have no clue about this major fairness issue. Now all that being said, for a lot of situations TOD is just fine. Moreover, in Indiana, real property may be transfered at death via a properly done and recorded TOD deed as well.

You do need to speak with an estate planning attorney. TOD accounts and deeds are very useful but only if thought out and planned. Automatic transfers on death may result in the beneficiary losing government benefits or may result in assets going without restriction to someone who can't manage property correctly or to someone with debt problems. If all the assets are out of an estate, who is going to pay the necessary costs that can exist? So, contact an attorney in your area before you act.