In a prior post, I discussed the trend in probate law whereby nontestamentary arrangements are increasingly favored as ways to transfer property upon death without the need for probate. One such arrangement that I have written about previously is the Uniform Real Property Transfer on Death Act. Another such arrangement is the Uniform Transfer on Death Security Registration Act.
The purpose of the UTODSRA is "to allow the owner of securities to register the title in transfer-on-death (TOD) form," thus providing for a non-probate mechanism for transferring a security upon the death of the owner. Under the act, one or more individuals who own a security can take ownership in "beneficiary form," which simply means that ownership reflects the name of the registered owner(s), followed by the words “transfer on death”, “TOD”, “pay on death”, or “POD,” followed by the name of the beneficiary.
The UTODSRA extends to interests in private companies, including limited liability companies. This can be very beneficial because it is often families of small business owners that have the greatest need for a simple, low-cost alternative to probate.
Many buy-sell agreements restrict ownership of a business to a small group of individuals and provide for the buy-out of an owner upon death. However, depending on the terms of the buy-sell agreement and the owner's individual estate plan, the successor of a deceased business owner may need to go through probate in order to give the manager of the business assurance that the proceeds of the interest buy-out are paid to the right person. The UTODSRA provides one option for streamlining the effectuation of a buy-sell agreement upon the death of a business owner.
The purpose of the UTODSRA is "to allow the owner of securities to register the title in transfer-on-death (TOD) form," thus providing for a non-probate mechanism for transferring a security upon the death of the owner. Under the act, one or more individuals who own a security can take ownership in "beneficiary form," which simply means that ownership reflects the name of the registered owner(s), followed by the words “transfer on death”, “TOD”, “pay on death”, or “POD,” followed by the name of the beneficiary.
The UTODSRA extends to interests in private companies, including limited liability companies. This can be very beneficial because it is often families of small business owners that have the greatest need for a simple, low-cost alternative to probate.
Many buy-sell agreements restrict ownership of a business to a small group of individuals and provide for the buy-out of an owner upon death. However, depending on the terms of the buy-sell agreement and the owner's individual estate plan, the successor of a deceased business owner may need to go through probate in order to give the manager of the business assurance that the proceeds of the interest buy-out are paid to the right person. The UTODSRA provides one option for streamlining the effectuation of a buy-sell agreement upon the death of a business owner.