Should you opt for a TOD account or revocable trust?

Countless people are wondering whether a TOD account or revocable trust is the best option for their particular estate planning situation in Texas. Both offer a way of passing your assets down while working around the expensive and time-consuming drawbacks of probate.

So what’s the difference?

The main way that the two differ is in how flexible and thorough they are. TOD accounts are faster and more convenient, but a revocable trust offers a stronger plan for you and your beneficiaries that covers the myriad elements of passing away.

What does a TOD have to offer?

This stands for transfer on death and is used primarily for investment accounts. There’s also POD designation (payable on death), which is used more for handing your bank assets.

Both TOD and POD accounts have seen more use than ever in the past several years. This recent rise in popularity has caused more people to question whether preparing a revocable trust is truly the best thing to do for their estate plan.


What is the advantage of choosing a revocable trust?

While it’s true that a TOD or POD designation makes estate planning as fast and easy as possible, this won’t necessarily help you when seeking contributions from creditors to paying things the decedent’s unpaid taxes. Revocable trusts also allow you to play for incapacity, whereas a durable power of attorney is needed if you only have a TOD.

There are times when a TOD or POD account is a good way to avoid probate, but you aren’t always able to take care of the full scope of issues that tend to arise when someone passes away. A revocable trust may still be the best choice if there are complications like unpaid debts, taxes, and other expenses.