With Robinhood, you can name a beneficiary for your account to ensure that your assets are transferred to your designated person(s) in the event of your death.
In this article, we will explain how Robinhood beneficiaries work.
If you do not have a beneficiary for your Robinhood account, your assets may go through probate court, a lengthy process.
Probate can result in significant delays, legal fees, and other complications.
Naming a beneficiary is an easy way to help ensure that your assets are transferred to your designated person(s) quickly and efficiently.
Robinhood offers two types of beneficiaries for your account: Transfer on Death (TOD) beneficiaries and IRA beneficiaries.
Transfer on Death (TOD) beneficiaries are individuals you name to receive your Robinhood brokerage account holdings in the event of your death.
If you have named TOD beneficiaries, they can receive your assets without going through probate court.
TOD beneficiaries are not applicable for IRA accounts as they operate under different rules.
TOD beneficiaries can generally receive all securities, cash, and options contracts currently in your account.
They can transfer non-cash assets, like stocks, to their own Robinhood account.
From their account, TOD beneficiaries can hold the assets, transfer them to another brokerage through ACATS, or liquidate them for cash.
IRA beneficiaries are individuals you name to receive your Robinhood IRA account holdings in the event of your death.
You can name IRA beneficiaries separately from your brokerage account beneficiaries.
The assets in your IRA account will be split across all listed beneficiaries as specified.
IRA beneficiaries will need to open an Inherited IRA account with Robinhood to receive their assets, unless they are a spouse beneficiary and choose to receive them into their own IRA.
The rules surrounding the distribution and tax treatment of Inherited IRA assets can be complex, and we recommend any IRA beneficiary consult with a tax professional for their unique situation.
To set up beneficiaries for your Robinhood brokerage and IRA accounts, follow these steps:
From here, you can add or edit your beneficiaries for your brokerage and IRA accounts.
You can change your beneficiaries at any time.
If you pass away and have designated beneficiaries, they should contact Robinhood to begin the process of claiming their assets.
Robinhood's estates team will coordinate with your beneficiaries from there.
To receive your Robinhood assets, the beneficiaries will need to provide Robinhood's estates team with the account owner's death certificate and may need to show their government-issued ID and other documentation.
Any assets remaining will then be transferred to the beneficiaries.
At this time, crypto assets are not included in the beneficiary process.
Any crypto assets will be distributed as part of your estate. Robinhood is working on including crypto in the beneficiary process.
In conclusion, naming a beneficiary is an easy process that can make things a lot easier in the unfortunate event of a death.
Keep in mind, you need to do this separately for your IRA account and your taxable brokerage account if you have both.
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