If entire estate is TOD (transfer on death) how are taxes and costs paid?

While it is wise to have a will, as Ralph mentions, it wouldn't serve to "clarify" the decedent's wishes. TOD accounts and the Will have nothing to do with one another because they control different property, depending on how title is help. Each can provide for distributions to totally different beneficiaries.

Drafted properly, a will is a written instrument disposing of a decedent's probate assets; that is, assets the decedent owned in his/her name alone (sole ownership), or the decedent's interest in property held as Tenants in Common.

A TOD/POD account passes directly to the beneficiaries named without probate. The will is ignored.

The decedent's debts and final expenses are generally paid from the probate estate, and/or assets held in a living trust, before distributions are made. It is my understanding, and what I've seen in practice, creditors have no claim against TOD beneficiaries.

Here's a link to an interesting article on the subject.

http://wills.about.com/od/howtoavoidprobate/qt/pay...

Incidentally, here's a list of other assets paid to beneficiaries where the will is ignored:

1. Assets held as joint tenancy with the rights of survivorship (at the first death)

2. Bank POD and ITF (in trust for) accounts

3. Assets owned by a living trust

4. Retirement plans with designated beneficiaries

5. Annuities with designated beneficiaries

6. Life insurance with designated beneficiaries

Hope my answer was clear and earns your Best Answer vote!

DISCLAIMER FOR PROFESSIONALS: While the information in this response was obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. The opinion voiced in this answer is for general information only and it shall not be construed as tax, legal, or investment advice for any individual. Questioners are urged to consult with their professional advisers before making any decisions regarding their finances.

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The executor is responsible for settling all taxes and debts of the estate before any dispersments can be completed to the heir(s) (depending on state law).

If a person lists an heir as joint owner on all their assets,that person can take possession of the assets without paying any taxes or costs.

However,the co-owner is also responsible for for paying taxes or debts before death.

Even with a TOD,a person should have a will drawn up to avoid disputes with other family members,establishing an executor and trustee to make sure the assets go where they are supposed to go and taxes and final bills are paid.

The basic job of the trustee is to make sure the executor does his job properly.

since the limit is $5Mil unless the estate is that much or greater, there is likely no tax to consider

but the estate trust tax return would solve all the tax problems before the beneficiaries receive anything