What happens to securities registered under the Transfer-on-Death Security Registration Act upon death?

• A. They pass to the designated beneficiary
• B. They become part of the probate estate
• C. They pass to the executor
• D. They lapse

Answer: (A)

Transfer-on-Death registrations let you name a beneficiary to receive the securities automatically when you die. This arrangement keeps the transfer out of probate, so the assets pass directly to the designated beneficiary rather than becoming part of the decedent’s probate estate or being handled by the executor. After death, the beneficiary presents the death certificate and any required forms to the transfer agent, who then transfers title to the beneficiary. If there’s a valid TOD designation, that’s exactly what happens: the securities go to the named beneficiary. If there’s no valid TOD designation, then the securities would follow the will or intestacy rules and go through probate.