Transfer on Death (TOD) in Australia: How It Works & 2025 Updates

Estate planning can be an emotional and administrative minefield, but new tools are making it easier than ever for Australians to pass on assets efficiently. One such tool gaining traction is the Transfer on Death (TOD) designation—a mechanism that allows assets to pass directly to a beneficiary, bypassing probate and streamlining inheritance. As 2025 ushers in new regulatory clarity and product offerings, understanding TOD is increasingly essential for anyone thinking about their financial legacy.

What is Transfer on Death (TOD)?

Transfer on Death (TOD) is a legal arrangement that lets the owner of certain assets—such as shares, managed funds, or bank accounts—nominate a beneficiary who will automatically receive those assets upon the owner’s death. Unlike traditional wills, TOD designations operate outside of probate, reducing legal delays and costs.

• Direct transfer: Assets move straight to the named beneficiary without executor intervention.
• Revocable: The owner can change or revoke the beneficiary designation at any time while alive.
• Asset-specific: Typically used for financial accounts and securities, though some states are trialling TOD for real property.

While TOD has been a staple in the United States for decades, Australian uptake has accelerated in recent years—particularly as fintech platforms and digital banks roll out TOD options for investment accounts.

2025 Policy Updates and Legal Landscape

The regulatory environment for TOD in Australia is evolving. As of 2025, several states—including Victoria and New South Wales—have introduced pilot schemes allowing for TOD designations on certain real estate holdings, following the success of similar initiatives in the US and UK. ASIC has also released new guidance clarifying disclosure requirements and consumer protections for TOD products offered by financial institutions.

• Probate relief: New legislation exempts TOD-designated assets from probate if documentation is up to date and compliant.
• Tax implications: The ATO confirmed that capital gains tax (CGT) events are triggered on the date of transfer, not death, providing clarity for beneficiaries planning asset sales.
• Superannuation exception: Super funds are generally not eligible for TOD, as they have their own binding nomination processes.

For Australians with cross-jurisdictional assets, recent treaties have made it easier to use TOD for international investments, provided local laws recognise beneficiary designations.

Practical Benefits and Potential Pitfalls

Why are more Australians considering TOD in 2025? The answer is simple: speed, simplicity, and control. Here are some of the main advantages:

• Faster access to funds: Beneficiaries can access assets within weeks, rather than months or years.
• Lower legal costs: Bypassing probate slashes legal fees and administrative expenses.
• Privacy: Transfers occur off the public record, unlike wills which become public documents.
• Flexibility: Owners can update beneficiaries as life circumstances change.

However, TOD isn’t a silver bullet. It’s essential to be aware of potential issues:

• Conflicts with wills: If a will and a TOD designation disagree, the TOD typically prevails for the specific asset.
• Complex family dynamics: TOD does not account for blended families or minor beneficiaries without additional legal planning.
• Eligibility limits: Not all assets or accounts are TOD-eligible, and banks/platforms vary in their offerings.

Consider Sarah, a Sydney-based investor who designated her daughter as the TOD beneficiary on her ASX portfolio in 2024. When Sarah passed away in 2025, her daughter received the shares within three weeks, bypassing the year-long probate process faced by other family members with non-TOD assets.

How to Set Up a TOD in Australia

Setting up a Transfer on Death designation is more accessible than ever, thanks to digital onboarding and streamlined compliance:

1. Check eligibility: Confirm with your financial institution or share registry that your asset supports TOD.
2. Nominate beneficiaries: Complete the required forms, providing full legal names and identification details.
3. Keep records updated: Review your designations regularly, especially after major life events like marriage, divorce, or the birth of children.
4. Seek professional guidance: For complex estates, coordinate TOD with your overall estate plan to avoid unintended conflicts.

As fintech adoption grows, expect to see more banks and investment platforms offering seamless online tools to manage TOD designations throughout 2025 and beyond.