A payable on death account (POD) is a quick, cost free vehicle to pass on unlimited amounts of cash assets to a designated heir without going through probate. Known as a poor man’s trust, a POD is easy to set up using a bank provided form to designate a beneficiary.
In addition to being free and easy to setup, the depositor retains full control of the assets in the account and can change the beneficiary or change the status of the account at will.
It is equally easy for the beneficiary to take possession of assets in a POD. Usually all that is required is to present the bank with a certified death certificate along with proof of identification.
A POD does have some short comings and potential pitfalls.
While the funds in a POD avoid the expense and delay of probate court, they remain subject to the claims of creditors and other heirs to the estate. This is particularly problematic for the executor of the estate, especially if the assets from the POD have already been dispersed.
Generally a POD can have only one beneficiary, requiring separate accounts to leave assets to multiple heirs. The FDIC treats each account separately for insurance purposes allowing an individual depositor to be insured above the usual 250,000 dollar institutional limit.
A POD may not be used to bequeath assets to a minor, or to pass on ownership of stocks, bonds, mutual funds or other non-cash assets.
For a more comprehensive look at Payable on Death Account pros and cons and how a POD can fit into your estate planning contact the law offices of James C. Shields; our attorneys are available to help insure that your estate is settled in the manner in which you intended, easing your loved ones concerns during the most difficult of times.