Yes it will, assuming that your named beneficiary(s) survive you. However, such a designation will not remove these assets from your taxable estate if you are otherwise subject to federal or state estate tax.
This response contemplates only the laws of Ohio and is not intended to apply to other jurisdictions. None of the information in this response should be used or relied upon as legal advice or legal opinion about specific matters, facts, situations or issues. Viewing it does not establish an attorney-client relationship between you and Sherrille D. Akin, the law firm of Isaac, Brant, Ledman & Teetor LLP, or any of its individual attorneys
I think you can avoid probate with this method, but you have to be very aware of the designations and backup designations and that they actually carry out your intent.
This is not legal advice nor intended to create an attorney-client relationship.
As you may know, probate assets include only those assets of which you own a sole interest (joint tenancy assets are nonprobate) and that do not have named beneficiaries (IRAs, life insurance, pay-on-death accounts are nonprobate). As the other attorney explained, however, there is a difference between probate and taxable estate assets. Both probate and nonprobate assets are subject to estate taxation.
Only probate assets are governed by your Will and subject to probate court process. In some states, where probate process is expensive, difficult and lengthy, it may be wise to hold only nonprobate assets in order to avoid probate process. In other states, probate is a relatively easy, quick and inexpensive process.
Another consideration is that Wills are more flexible than TOD designations. For example, you can name multiple beneficiaries, allow for varying scenarios depending on which beneficiaries survive you, provide that assets for minors are distributed in trust or upon the discretion of your executor, and create trusts that avoid estate taxation and provide for multiple generations.
That said, if probate avoidance is your goal, the TOD will work. Just be sure that all of your assets have beneficiary designations, including contingent beneficiaries.
Legal advice depends upon the particular facts of a given situation. Please use my answers as general information but not legal counsel.