Transfer-on-Death (TOD) Deeds and Payable-on-Death (POD) Accounts in NC: What Families Need to Know

NC Deep Dives 14 min read

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One of the most common questions families ask after a loved one dies is: “Does everything have to go through probate?” The answer, thankfully, is no. North Carolina offers several tools that allow assets to pass directly to beneficiaries outside the probate process, and two of the most powerful are transfer-on-death (TOD) deeds and payable-on-death (POD) account designations. Understanding how these tools work, and where they fall short, can save your family significant time, expense, and heartache.

Afterpath provides North Carolina families with guided, step-by-step estate settlement tools, including an AI-powered Pathfinder assistant, NC-specific compliance tracking, document management, and task automation, helping families understand which assets go through probate and which transfer automatically.

What “Transfer-on-Death” and “Payable-on-Death” Actually Mean

At their core, TOD and POD designations do the same thing: they let you name a beneficiary who automatically receives the asset when you die, without going through probate court. The asset transfers directly from the owner to the named beneficiary by operation of law.

The terminology depends on the type of asset:

Payable-on-Death (POD): Used for bank accounts, checking, savings, money market accounts, and certificates of deposit
Transfer-on-Death (TOD): Used for investment accounts, brokerage accounts, securities, and now in North Carolina, real estate
Beneficiary designation: The broader term that includes life insurance policies and retirement accounts (IRA, 401(k))

The practical effect is identical. You retain full ownership and control during your lifetime. You can change the beneficiary at any time. And when you die, the asset passes to the named person without a probate filing, court appointment, or waiting period.

NC’s Transfer-on-Death Deed for Real Estate

For years, one of the biggest limitations in North Carolina estate planning was that real estate could not carry a TOD designation. If you owned a home and wanted it to go to your children without probate, your main options were a revocable trust, joint tenancy, or simply a will (which requires probate).

That changed when North Carolina enacted the Uniform Real Property Transfer on Death Act, codified at NC G.S. Chapter 31D. This law allows property owners to execute a transfer-on-death deed that names a beneficiary (or beneficiaries) to receive real estate upon the owner’s death.

How TOD Deeds Work in NC

A TOD deed is a legal document that:

Identifies the property with a legal description
Names one or more beneficiaries who will receive the property at the owner’s death
Is recorded with the county Register of Deeds during the owner’s lifetime
Takes effect only at death – the beneficiary has no ownership rights while the owner is alive

The owner retains full control of the property during their lifetime. They can sell it, mortgage it, rent it, or live in it. They can revoke the TOD deed at any time by recording a revocation with the Register of Deeds. The beneficiary doesn’t even need to know the deed exists.

When the owner dies, the beneficiary records a certified copy of the death certificate along with the TOD deed, and the property transfers. No probate required. No executor needed (for this asset). No court involvement.

Requirements for a Valid TOD Deed in NC

To be legally effective, a TOD deed in North Carolina must:

Be signed by the property owner (the transferor)
Contain a legal description of the property
Clearly state that the transfer occurs at the owner’s death
Be recorded with the Register of Deeds in the county where the property is located during the owner’s lifetime
Comply with the formalities required for recording real property documents in NC

A TOD deed that is signed but never recorded is not effective. A TOD deed recorded after the owner’s death is not effective. Timing and recording are critical.

Revoking a TOD Deed

The owner can revoke a TOD deed at any time by:

Recording a revocation instrument with the Register of Deeds
Recording a new TOD deed for the same property (the new deed supersedes the old one)
Selling or transferring the property during their lifetime (the sale automatically invalidates the TOD deed)

Revocation must be recorded before the owner’s death to be effective.

Payable-on-Death (POD) Bank Accounts

POD designations for bank accounts have been available in North Carolina for much longer than TOD deeds, and they’re one of the simplest estate planning tools available.

How POD Accounts Work

When you open a bank account (or add a designation to an existing one), you can name a payable-on-death beneficiary. Here’s what that means:

During your lifetime: The account is entirely yours. You deposit, withdraw, and manage the funds however you choose. The POD beneficiary has no access to the account, no right to the money, and no ability to make transactions.
At your death: The beneficiary presents a certified death certificate to the bank, proves their identity, and the funds are released to them directly. No probate. No executor involvement. No waiting for court appointment.

Setting Up a POD Account

Adding a POD designation is simple:

Visit your bank or credit union
Ask to add a payable-on-death beneficiary to your account
Fill out the bank’s beneficiary designation form
Name your beneficiary (or beneficiaries, with percentage allocations)
Keep a copy of the signed form for your records

Most banks and credit unions in North Carolina offer POD designations at no charge. You can name one beneficiary or multiple beneficiaries. You can change the designation at any time by filling out a new form.

Claiming a POD Account After Death

If you’re the named POD beneficiary and the account holder has died, claiming the funds is straightforward:

Visit the bank branch where the account is held (or contact customer service)
Bring a certified copy of the death certificate
Bring your government-issued photo ID
The bank verifies your identity against the POD designation on file
The funds are released to you, typically within a few business days

You do not need Letters Testamentary. You do not need to be the executor. You do not need to open a probate case. The money is yours by right of the POD designation.

Afterpath’s Pathfinder can walk you through the claiming process for specific banks and institutions, including what documents to bring and what to expect, so you don’t waste trips or get turned away for missing paperwork.

Transfer-on-Death (TOD) for Investment Accounts

Investment accounts, including brokerage accounts, mutual fund accounts, and individual securities, can also carry TOD designations.

How TOD Investment Accounts Work

The mechanics are identical to POD bank accounts:

You name a beneficiary with your brokerage firm or investment company
You retain full ownership and control during your lifetime
At your death, the beneficiary contacts the firm, presents a death certificate, and the account transfers to them

Most major brokerage firms (Fidelity, Schwab, Vanguard, Edward Jones, etc.) offer TOD designations as a standard feature. The process for claiming after death varies by firm but generally requires:

A certified death certificate
A completed transfer form (provided by the firm)
Identity verification
A receiving account in the beneficiary’s name

Important Tax Considerations

When investment accounts transfer via TOD, the beneficiary receives a stepped-up cost basis as of the date of death. This means:

If the decedent purchased stock at $10 per share and it was worth $50 per share at death, the beneficiary’s cost basis is $50
If the beneficiary sells immediately at $50, there is no capital gains tax
This stepped-up basis applies regardless of whether the asset went through probate

This tax benefit is one of the most significant advantages of inherited investment accounts, and it applies to TOD transfers just as it does to assets that pass through a will.

What TOD and POD Designations Cannot Do

These tools are powerful, but they have real limitations. Understanding them is essential for proper planning.

They Don’t Replace a Will

Even if every bank account has a POD designation and every investment account has a TOD beneficiary, you still need a will. Here’s why:

Personal property: Furniture, jewelry, vehicles, artwork, and other personal possessions can’t carry TOD or POD designations
Residual assets: There may be assets you didn’t anticipate, like a tax refund, a legal settlement, or an unclaimed account
Guardian designation: If you have minor children, only a will can name a guardian
Executor appointment: A will names the executor who manages everything else

A will catches everything that falls through the cracks of your beneficiary designations.

Creditor Claims Still Apply

A common misconception is that TOD and POD assets are protected from the decedent’s creditors. In North Carolina, this is not entirely true.

If the estate doesn’t have enough probate assets to pay valid creditor claims, creditors may be able to reach TOD and POD assets. The beneficiary may receive the asset initially, but could be required to return funds to satisfy debts. This is particularly relevant in situations involving significant medical debt, Medicaid recovery claims, or unpaid taxes.

Medicaid Estate Recovery is a specific concern for North Carolina families. If the decedent received Medicaid benefits, the state may seek reimbursement from the estate. Depending on the circumstances, TOD and POD assets could be subject to this recovery. Our Medicaid estate recovery guide covers this in detail.

Family Disputes Can Still Arise

TOD and POD designations bypass probate, but they don’t bypass family conflict. If a parent names one child as the POD beneficiary on a $300,000 account but their will says “divide everything equally among my children,” a dispute will follow. The POD designation typically controls (it’s a contract with the bank), but the other children may feel cheated and pursue legal action.

Keeping beneficiary designations consistent with your overall estate plan is critical. Afterpath’s NC Compliance Engine helps executors identify potential conflicts between beneficiary designations and will provisions, so these issues can be addressed early rather than discovered too late.

Revocation Risks

TOD deeds and POD designations can be unintentionally invalidated:

Divorce: North Carolina law (NC G.S. 31D-4) automatically revokes a TOD deed in favor of a former spouse upon divorce. But POD designations may not be automatically revoked by divorce. If you divorce and don’t update your POD beneficiary, your ex-spouse may still receive the funds.
Outdated designations: If you named a beneficiary years ago and your wishes have changed, the old designation still controls unless you update it.
Predeceased beneficiary: If the named beneficiary dies before you and you don’t name a replacement, the asset may revert to the probate estate anyway.

How TOD and POD Tools Fit Into the Bigger Picture

Transfer-on-death and payable-on-death designations are best understood as components of a comprehensive estate plan, not substitutes for one.

When They Work Best

Simple estates: If you have a home, a couple of bank accounts, and an investment account, TOD and POD designations may allow most of your assets to bypass probate entirely
Single beneficiary: When everything goes to one person (a surviving spouse, for example), these tools are straightforward and effective
Supplementing a trust: For assets you don’t want to title in a trust, TOD and POD designations add a layer of probate avoidance

When They’re Not Enough

Complex family situations: Blended families, estranged children, or unequal distributions need more sophisticated planning
Estate tax planning: Larger estates may benefit from trust structures that TOD and POD designations can’t provide
Special needs beneficiaries: If a beneficiary receives government benefits, a direct TOD or POD transfer could disqualify them. A special needs trust is the appropriate tool.
Minor beneficiaries: Banks and brokerage firms generally can’t release funds directly to minors. A trust or custodial arrangement is needed.

For a deeper comparison of trusts and wills in North Carolina, see our trust vs. will guide.

What Executors Need to Know About TOD and POD Assets

If you’re serving as executor of an estate in North Carolina, understanding how these designations affect your responsibilities is important.

TOD and POD Assets Are Generally Not Part of the Probate Estate

Assets with valid beneficiary designations transfer outside of probate. You don’t manage them, distribute them, or include them in the probate inventory. The beneficiary deals directly with the institution holding the asset.

However, you should still be aware of them because:

Tax implications: TOD and POD assets may be included in the gross estate for federal estate tax purposes, even though they don’t go through probate
Creditor claims: As noted above, if the probate estate can’t cover debts, these assets may be reachable
Family expectations: Beneficiaries may not understand why certain assets went directly to one person while other assets are distributed differently through the will

Afterpath’s Document Vault is a valuable tool for tracking all assets, both probate and non-probate. Keeping a comprehensive record of every asset, including who receives it and how, helps you maintain transparency and answer questions from beneficiaries.

Helping Beneficiaries Claim Their Assets

As executor, you’re not legally required to help POD and TOD beneficiaries claim their assets. But as a practical matter, beneficiaries often need guidance. Providing them with the bank’s contact information, a certified death certificate, and an explanation of the process is a kindness that reduces confusion and phone calls back to you.

Afterpath’s Pathfinder can generate clear, simple instructions for beneficiaries on how to claim specific types of TOD and POD assets, so you can share helpful guidance without having to research each institution’s procedures yourself.

Frequently Asked Questions

Can I create a TOD deed for property I own with someone else? It depends on how you hold title. If you own property as joint tenants with right of survivorship, the property already passes to the surviving owner at death, and a TOD deed isn’t needed. If you own property as tenants in common, each owner can potentially create a TOD deed for their share, but this can create complicated ownership situations. Consult an attorney before creating a TOD deed for jointly owned property.

What happens if the POD beneficiary dies before the account holder? If the named beneficiary predeceases the account holder and no alternate beneficiary is named, the POD designation typically lapses. The account then becomes part of the probate estate and passes according to the will or NC intestacy statutes.

Can creditors take money from a POD account after the owner dies? In some circumstances, yes. If the probate estate lacks sufficient assets to pay valid debts, creditors may be able to recover from POD assets. This is especially relevant for Medicaid estate recovery.

Is a TOD deed the same as a regular deed? No. A regular deed transfers ownership immediately. A TOD deed transfers ownership only at the owner’s death. During the owner’s lifetime, the TOD deed has no effect on ownership, and the named beneficiary has no interest in the property.

Do I need an attorney to create a TOD deed? While North Carolina doesn’t legally require an attorney, TOD deeds must meet specific statutory requirements to be valid. Errors in the legal description, failure to record properly, or improper execution can make the deed ineffective. Working with an attorney or using a guided tool is strongly recommended.

Can Afterpath help me understand which assets go through probate? Yes. Afterpath’s Pathfinder can help you sort probate assets from non-probate assets, including TOD deeds, POD accounts, beneficiary designations, and jointly held property. The NC Compliance Engine ensures you’re tracking the right assets in your probate inventory and not wasting time on assets that transfer automatically.

Planning Ahead, Settling With Clarity

If you’re reading this as part of estate planning, TOD deeds and POD designations are among the simplest, most affordable tools available to help your family avoid the cost and delay of probate. Used thoughtfully alongside a will and, where appropriate, a trust, they can make estate settlement dramatically easier for the people you leave behind.

If you’re reading this because you’re settling an estate right now, knowing which assets bypass probate, and which ones require formal administration, is one of the first and most important steps. Not every asset needs to go through the courthouse. Understanding the difference can save you months of work and thousands of dollars.

The average estate takes over 570 hours to settle, but much of that time is spent on confusion, not complexity. Afterpath cuts through the confusion. Pathfinder helps you identify which assets require probate action and which ones transfer automatically. The NC Compliance Engine tracks your deadlines. The Document Vault organizes everything. And when you need professional help, the Professional Marketplace connects you with vetted NC attorneys and advisors.

Get started with Afterpath today and settle your loved one’s estate with confidence.

For related topics, see our guides on how to avoid probate in North Carolina, probate vs. non-probate assets, and living trust vs. will in NC.

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