Transfer on death designations are a wonderful thing. They can help avoid probate and speed the transfer of assets on death. However, there are traps for the unwary. That is, often the account holder will not tell you that if a transfer on death beneficiary predeceases the owner, then the surviving transfer on death beneficiaries will receive predeceased beneficiary’s share.

For instance, assume you have two children, Jack and Jane. Additionally, assume Jack and Jane have children. If you name Jack and Jane as transfer on death beneficiaries and Jack predeceases then you have disinherited Jack's children because Jane will receive Jack's share. This train wreck can be avoided with proper planning.