Transfers on Death (TOD) and estate matters

[RSCOTTJR1074]

Not a subject we like to think about. But those considering living abroad either temporarily, for business or permanently need to consider what happens in event of their death to their property both in terms of US law and foreign country law. Many might consider an intervivos (living) revocable trust in the US perhaps but one vehicle many use to make transfer to beneficiaries easier is use of POD (Pay on Death), TOD (Transfer on Death) or similar vehicles. I have one of these with a major US broker and was surprised last week in statement to have a flyer that updated their account terms and "clarified" with regard to their TOD requirements. Something I use with them. First they noted spousal consent needed in community property states and a couple of others plus Guam. Then they made note that to set up a TOD account you needed to be a US Citizen and you had to be living in the US. Unclear if that last requirement meant you needed to be living here continuously or just when set this up. The more distubing item was with repect to beneficiaries. Here too they made "clear" that you had to be either a US citizen or a legal resident (note difference in setting up or being beneficiary) to be a beneficiary of a TOD. Unclear whether this is when set up, continuously or just when distribution is made. So a parent of someone living overseas could set up a TOD only to have them find out after their passing that distribution did not go as intended. I recently had son of friend who was executive of major US company and spent three years in Switzerland as their Canadian, European and Middle East representative. If he were to have had a TOD set up before he left he could have fallen into this trap. Likewise if his parents had set this up naming him a beneficiary perhaps even more of an unseen trap. Must admit this is not something I would have considered when thinking about temporary or permanent residency abroad. One of many things to consider carefully before making a decision on foreign residency.