A brokerage or investment account can be one of the most valuable things someone leaves behind — and one of the most misunderstood when it comes to how it passes on. Much of what happens next is decided not by the will, but by how the account itself is set up and who, if anyone, is named on it.
Where your investments live — and how they pass on
Investments are held at a custodian — the brokerage firm that keeps the account and processes claims. How that account passes when the owner dies depends largely on how it is registered. Some accounts are set up to move directly to a named person; others, with no one named, fall back to the estate and the probate process.
That distinction matters more than most people expect. A single registration choice, made when the account was opened, can quietly determine whether a family receives the assets quickly and directly — or waits on a court. The sections below walk through both paths.
Transfer on death: naming who receives the account
One of the most direct ways an investment account passes on is a transfer-on-death (TOD) registration. A TOD designation lets a brokerage account or individual securities pass directly to a named beneficiary at death, generally outside probate.
How it works — you keep control
A TOD registration takes effect only at death. During life, the owner keeps full control of the account — buying, selling, withdrawing, and changing the beneficiary as they wish. The named beneficiary has no claim to the account while the owner is living; the designation simply directs where the account goes afterward.
Because state law — not federal law — governs how securities are registered, and a brokerage firm may choose whether to offer TOD at all, availability can vary. It is adopted in nearly all states, but it is worth confirming with the firm and checking the rules in your own state before relying on it.
TOD vs. your will
A TOD beneficiary designation generally overrides the will for that account. If the beneficiary form names one person and the will names another, the beneficiary form usually controls. That is why it helps to keep the two consistent — a designation set years ago can quietly contradict a more recent will, and the account follows the form, not the intent behind the will.
Why it usually skips probate
Because a TOD account passes directly to the named beneficiary, it generally does not go through probate — the court process for distributing assets that pass under a will. That can mean the beneficiary reaches the account sooner and with less paperwork than an estate transfer would require.
The beneficiary line on a brokerage account is quiet, but it speaks louder than the will.
What happens at the custodian
When the owner dies, the brokerage firm follows its own process for transferring the account. What that looks like depends mostly on whether a beneficiary was named.
With a named beneficiary
When a TOD beneficiary is on file, the account generally passes to that person directly. The firm typically opens a new account in the beneficiary’s name and moves the assets into it, rather than the beneficiary inheriting the original account as-is. The exact steps vary by firm, so it is best to confirm the process with the custodian.
With no beneficiary — the estate
When no beneficiary is named, the account generally passes to the estate rather than directly to a person. In that case the firm typically opens a new account for the beneficiary or estate and processes the transfer through it — a path that usually runs through probate and involves more documentation.
Documents the firm will ask for
Firms commonly ask for a certified death certificate, and for estate transfers, a court letter appointing the executor. Requirements vary by firm, so it helps to contact the custodian early and confirm the full list before gathering paperwork — that way a family is not making repeated trips for documents it did not know it needed.
A note on taxes: the “step-up” in cost basis
At a high level, and as of 2026, inherited securities generally receive a “stepped-up” cost basis — their cost basis is reset to their value on the date of death. Because capital-gains tax is figured on the gain above the cost basis, that reset can affect how much tax applies if the securities are later sold.
The specifics can get involved and depend on the situation, so this is educational only. A tax professional can explain how the step-up applies to a particular set of investments.
What your family needs to find the account
None of the above helps if a family cannot find the account in the first place. Keeping account statements and the custodian’s name in a known place makes it far easier for the people you trust to locate the account and begin a claim.
An investment account that no one knows about can sit unclaimed for years. The simplest safeguard is also the quietest: a clear record of where the account lives and who holds it, kept somewhere the right people can reach when they need it.
Common questions
What is a transfer-on-death (TOD) registration?
A transfer-on-death (TOD) registration lets a brokerage account or individual securities pass directly to a named beneficiary when the owner dies, generally outside probate. The owner keeps full control during life and can change the designation. Because state law governs how securities are registered and a firm may choose whether to offer TOD, availability can vary — it is adopted in nearly all states, but confirm with your firm and check the rules in your state.
Does a TOD beneficiary override my will?
Generally, a TOD beneficiary designation controls who receives that account and overrides what the will says for it. Because of that, it is worth keeping the two consistent so they do not point in different directions. For your own situation, confirm the details with the brokerage firm and, where it matters, a qualified attorney.
What happens to a brokerage account with no beneficiary named?
When no beneficiary is named, the account generally passes to the estate rather than directly to a person. The firm typically opens a new account for the beneficiary or estate and processes the transfer through that account. Requirements vary by firm, so it is best to confirm the specific process with the custodian.
What documents will the brokerage need after a death?
Firms commonly ask for a certified death certificate, and for estate transfers, a court letter appointing the executor. Exact requirements vary by firm, so it helps to contact the custodian early to confirm the full list before gathering paperwork.
What is the “step-up in basis” on inherited investments?
As a general matter, and as of 2026, inherited securities usually receive a “stepped-up” cost basis equal to their value on the date of death. That reset can affect how much capital-gains tax applies if the securities are later sold. The specifics can be involved, so a tax professional can explain how it applies to a particular situation.
Recording this now is the easy part
Most of what makes an investment account hard to claim later comes down to one thing: no one knew where it lived. That is the whole idea behind Trust Relay — a quiet, private map of where your accounts are held, kept ready, so the people you trust are not left guessing which firm to call.