SIE practice questioneasyTransfer on Death
A Transfer on Death (TOD) designation on a brokerage account allows:
- AThe account to be jointly managed with another person
- BThe broker-dealer to trade without authorization after the owner dies
- CAutomatic margin borrowing against the account
- DAssets to pass directly to named beneficiaries upon the account holder's death, bypassing probate✓ Correct answer
Explanation
Why D — Assets to pass directly to named beneficiaries upon the account holder's death, bypassing probate
A TOD (Transfer on Death) designation allows account assets to pass directly to named beneficiaries when the account holder dies, avoiding the probate process. The beneficiaries have no rights to the account while the owner is alive — the owner retains full control and can change beneficiaries at any time. TOD designations are available for individual accounts and are a simpler alternative to establishing a trust.
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