If you landed here looking up California Probate Code Section 5600 because you want to name a beneficiary on a brokerage account, stock, or mutual fund, you’re one section off. Section 5600 opens the statute on revocable transfer on death deeds for real estate.1California Legislative Information. California Code PROB 5600 – Revocable Transfer on Death Deed The rules that let you pass securities to a named beneficiary outside probate sit in a different part of the Probate Code, the Uniform TOD Security Registration Act, which begins at Section 5500.2Justia Law. California Probate Code – Uniform TOD Security Registration Act Everything below walks through how that securities registration works, because that is almost certainly what you were looking for.
Section 5600 Covers Real Estate, Not Securities
Section 5600 applies to TOD deeds made by a transferor who dies on or after January 1, 2016, and governs the transfer of real property.1California Legislative Information. California Code PROB 5600 – Revocable Transfer on Death Deed It has nothing to do with stocks, bonds, or brokerage accounts. For securities, the governing statute is Part 3 of Division 5, Sections 5500 through 5512.2Justia Law. California Probate Code – Uniform TOD Security Registration Act Keep that distinction in mind if you’re pulling up the actual code sections.
How TOD Security Registration Works
A TOD registration is a contract between you and the entity that holds your securities. You add a beneficiary designation to the account’s title, and that designation takes effect automatically at your death. The registering entity transfers ownership to the person you named without any court involvement, any probate petition, or any need for your executor to step in.2Justia Law. California Probate Code – Uniform TOD Security Registration Act
The statute calls this “registration in beneficiary form.” The account title shows who owns the security now and who should receive it at death. Section 5509 states that a TOD transfer is not testamentary, so probate courts and will contests do not touch it.2Justia Law. California Probate Code – Uniform TOD Security Registration Act
This is different from joint tenancy. A joint tenant has ownership rights while you’re alive and can sell their interest or create complications. A TOD beneficiary has no ownership stake, no control, and no legal right to the security until you die.
What Can You Put a TOD Designation On
Section 5501 defines “security” broadly enough to cover both certificated and uncertificated securities. In practical terms, you can add a TOD designation to:
- Individual stocks
- Corporate and government bonds
- Mutual fund shares
- Brokerage accounts, including the cash balance, reinvestment accounts, and dividends in them
- Investment management or custody accounts at a bank with trust powers
- Cash equivalents inside those accounts, such as treasury bills, money market funds, and savings bonds
A TOD designation on a brokerage account captures essentially everything in that account, not just the stocks and bonds.2Justia Law. California Probate Code – Uniform TOD Security Registration Act
Some things look like they should fit and don’t. Real property uses a TOD deed under Section 5600, not this statute. Bank deposit accounts use a payable-on-death designation under different rules. Retirement accounts like IRAs and 401(k)s have their own beneficiary designation rules under federal law.
Who Can Register Securities This Way
Section 5502 limits TOD registration to two ownership structures: a single individual who owns the security alone, or multiple individuals who own it with a right of survivorship. Tenants in common cannot add a TOD designation. Multiple owners registered in beneficiary form are treated as joint tenants with right of survivorship, tenants by the entireties, or community property with survivorship rights.2Justia Law. California Probate Code – Uniform TOD Security Registration Act
For married couples, this matters. If you and your spouse hold securities as community property without a survivorship designation, confirm the account title reflects a right of survivorship before adding a TOD beneficiary. Your brokerage firm can retitle the account.
Adding the Designation
The registration must name a beneficiary to take ownership at your death, or at the death of the last surviving owner on a joint account.3California Legislative Information. California Probate Code 5504 The designation shows up as the words “transfer on death” or the abbreviation “TOD” after the owner’s name and before the beneficiary’s name. California also accepts “pay on death” or “POD” as equivalent language.2Justia Law. California Probate Code – Uniform TOD Security Registration Act
Section 5510 lets the registering entity set its own procedures for accepting and processing the registration. Your brokerage or transfer agent will have a form. It typically asks for your name, the beneficiary’s full legal name, and sometimes the beneficiary’s Social Security number. Most firms let you name primary and contingent beneficiaries, so if your first choice dies before you, the asset passes to your backup instead of falling into probate.
You Keep Full Control While You’re Alive
Adding a TOD designation changes nothing about how you use the account. Section 5506 is explicit: the beneficiary designation has no effect on ownership until the owner’s death.4California Legislative Information. California Probate Code 5506 You can buy and sell securities, withdraw cash, change brokers, or close the account entirely. The beneficiary has no claim, no veto, and no right to be consulted. You don’t need to tell them the designation exists.
This is why TOD registration appeals to people who don’t want the overhead of a living trust. There’s no separate legal entity to create, no trust document to draft, no retitling of assets into a trust’s name. You fill out a form at your brokerage, and the assets pass outside probate at your death while remaining fully under your control until then.
Changing or Revoking the Designation
You can cancel or change a TOD designation at any time without the beneficiary’s consent. On accounts with multiple owners, all surviving owners must agree to the change.4California Legislative Information. California Probate Code 5506 You revoke by submitting a new registration form naming a different beneficiary or removing the designation entirely. The most recent valid designation on file controls.
A provision in your will or trust cannot override an active TOD registration. The transfer happens by contract with the registering entity, so your will simply doesn’t reach these assets.2Justia Law. California Probate Code – Uniform TOD Security Registration Act If you want to redirect a TOD security to someone named in your will, update the designation directly with the brokerage. People forget this step after divorces, remarriages, and new estate plans, and it is one of the most common ways TOD designations produce unintended results.
An agent acting under a power of attorney generally cannot change your beneficiary designations. That authority stays with you personally. If you lose capacity and the designation needs updating, the options are limited and may require court intervention.
If the Beneficiary Dies Before You
If your named beneficiary dies first and you have not named a contingent beneficiary, the designation is effectively dead. Anti-lapse statutes that can redirect a failed bequest in a will to the deceased person’s descendants generally do not apply to nonprobate transfers like TOD registrations. The security would fall back into your probate estate, which defeats the purpose of setting up the designation.
Section 5510 offers a built-in workaround. Registering entities may accept a “lineal descendants per stirpes” designation, abbreviated LDPS. Adding LDPS after a beneficiary’s name means that if the beneficiary dies before you, their descendants automatically step into their place, identified according to the intestacy laws of the beneficiary’s home state.2Justia Law. California Probate Code – Uniform TOD Security Registration Act Not every firm offers it. Ask, especially if your beneficiary is elderly or in poor health.
Claiming the Securities After Death
When the sole owner, or the last surviving joint owner, dies, the beneficiary contacts the registering entity to claim the securities. The entity sets the documentation requirements, but at a minimum expect to provide a certified copy of the death certificate, proof of identity, and a completed transfer form. Certified death certificates typically cost between $15 and $25 depending on the county.
Once the paperwork clears, the securities are re-registered in the beneficiary’s name. No court order. No executor or administrator involved. The process usually takes a few weeks, far faster than probate.
Tax Treatment
Securities inherited through a TOD designation receive a stepped-up cost basis under Internal Revenue Code Section 1014, which resets the tax basis of inherited property to its fair market value on the date of death.5Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent If the original owner bought stock for $10,000 and it was worth $100,000 at death, the beneficiary’s basis is $100,000. Selling it the next day for $100,000 would trigger zero capital gains tax. The IRS also treats inherited assets as having been held long-term regardless of when the decedent actually bought them.
That stepped-up basis is one of the biggest tax advantages over lifetime gifting. If the owner had gifted the same securities while alive, the recipient would inherit the owner’s original $10,000 basis and owe tax on the full $90,000 gain at sale.
For estate tax, TOD securities are included in the deceased owner’s gross estate. Under the One Big Beautiful Bill Act, the federal estate tax exemption rises to $15 million per individual, or $30 million for married couples, beginning in 2026, with a 40 percent rate on amounts above the exemption. Most estates fall well below the threshold.
Creditors and Community Property
A TOD designation does not shield securities from the deceased owner’s creditors. Section 5509 states that the statute does not limit the rights of creditors against beneficiaries under other California laws.2Justia Law. California Probate Code – Uniform TOD Security Registration Act If the probate estate cannot cover the decedent’s debts, creditors may pursue the TOD beneficiary, generally up to the value of what they received.
Community property rules also survive. Section 5511 provides that nothing in the TOD act alters the community character of community property or community property rights.2Justia Law. California Probate Code – Uniform TOD Security Registration Act If securities were bought with community funds, a surviving spouse may have a claim to half of them regardless of who the TOD beneficiary is. Naming a third party as TOD beneficiary on community property securities without your spouse’s knowledge invites litigation.
When TOD Registration Is the Right Tool
TOD registration works best when the situation is straightforward: you know exactly who should receive the securities, you don’t need to attach conditions, and avoiding probate is a priority. For an estate plan that is essentially “everything to my spouse, then my kids,” adding TOD designations to investment accounts can keep those assets out of probate entirely at no cost.
Where TOD designations fall short is complexity. You cannot stagger distributions over time, attach conditions like finishing college, or build in protections for beneficiaries with special needs or creditor problems. A revocable living trust offers those features but costs more to set up and maintain. For many people, the sensible mix is both: a trust for assets that need management flexibility, and TOD designations for straightforward brokerage accounts that should pass cleanly at death.