.What Is a Payable on Death Account

From the Recaps Archives originally posted on 7/25/2019

What Is a Payable on Death Account (and Do I Still Need a Will if I Have One)?
Jessica Sillers Jul 16, 2019

When you login to your bank account online, you might notice an option to choose a beneficiary. Generally, this is someone who’d inherit your bank account after your death. The official name is a “payable on death” or POD account.

Easy enough. Enter your beneficiary’s name and contact info: Done. So, if you go this route, do you still need a will? Isn’t it easier to just type in your beneficiary’s name and be done with it?

The short answer is that, when done right, most people would benefit from both a payable on death designation and a last will and testament. POD accounts are better for quick cash for people handling your final affairs or counting on money for bills, while your will lets you get into clearer detail about the more nuanced aspects of settling your estate.

What Is a ‘Payable on Death’ or ‘Transfer on Death’ Account?

POD and TOD stand for “payable on death” and “transfer on death,” respectively. (TOD would be more likely to apply to assets such as a house.)

Most types of financial accounts—such as savings and checking accounts, CDs and investment account—let you name a POD beneficiary.

If you die, this person would inherit the money without going through probate (the often-lengthy process of executing a will). Generally, all he or should would need is ID and a copy of the death certificate. That’s generally ready in a matter of days to a few weeks after a death.

TOD is somewhat less common than POD, but some states will let you designate someone to inherit property like a house outside of probate. To set this up, you’d need to prepare a special deed and record it with the appropriate state or county office.

You can set up a POD beneficiary for a joint account with your spouse, as well. If you die, the account would go to your spouse first, and then to the POD beneficiaries after your spouse’s death.

You can also name multiple POD beneficiaries. Talk to an advisor at your bank if you want to assign a different proportion other than an even split. Ditto if you want to choose an alternate beneficiary in case your primary beneficiary is not around. It’s also worth searching your state’s law on whether a POD account would still pass to your (ex-)spouse if you divorce.

To continue reading, please go to the original article at
https://meetfabric.com/blog/payable-on-death-accounts