Payable on Death (POD) vs. Beneficiary Designations in Stuart
If you’re trying to determine what might happen to your bank account after you pass away, you might have come across the term “payable on death” (POD). How is this distinct from a beneficiary designation? What steps do you need to take to make sure that the money falls into the hands of someone you choose? These are questions you may want to raise during your first consultation with an experienced estate planning attorney in Stuart.
POD Is a Type of Beneficiary Designation
Although PODs and beneficiary designations are separate concepts, they are closely related. Simply put, a POD is a type of beneficiary designation. The term “beneficiary designation” refers not only to payable-on-death accounts but also to other similar estate planning mechanisms.
PODs refer specifically to bank accounts. When you create a payable-on-death arrangement, you select someone (or multiple people) who will automatically inherit the balance after you are gone.
It should be relatively easy to set this arrangement up. Simply visit your bank branch or call a representative to inquire about the appropriate steps. You may need to sign various forms while providing identification. From there, you can select a beneficiary and (preferably) inform them that they will inherit the assets.
When you pass away, your chosen beneficiary can simply contact the bank and notify them of your passing. They may need to bring a death certificate to prove that you are deceased. Your beneficiary must also bring valid identification to prove that they are entitled to receive the bank balance.
Beneficiary Designations Encompass Many Other Strategies
If a POD account is only one example of a beneficiary designation, then what other options are there? A common example is a transfer-on-death (TOD). Unlike a POD, a TOD applies specifically to brokerage accounts, stock portfolios, bonds, treasuries and similar financial assets. Instead of paying a bank balance when you die, a TOD transfers stocks and similar assets to your chosen beneficiary or beneficiaries. The underlying concept is identical to a TOD account.
Another type of beneficiary designation applies to any retirement accounts you have. These might include IRAs and 401(k)s. While many people do not choose beneficiaries for their bank accounts, beneficiary designations for retirement accounts are much more common. You may also select beneficiaries for any annuities you might own.
Beneficiary Designations Supersede Wills
You should be aware that your beneficiary designation will supersede or “override” anything you put in your Will. It is all too easy to create a POD arrangement and then forget about it. If you are not careful, your Will and your POD account could conflict with each other, leading to complicated legal disputes after you are gone. This is why it makes sense to coordinate with an estate planning attorney when setting up or modifying these arrangements.
Can a Stuart Estate Planning Lawyer Help Me?
PODs and TODs are both examples of beneficiary designations, and they represent incredibly powerful yet simple estate planning strategies in Stuart. That being said, there are many other ways to avoid probate, such as creating a trust. To assess your full range of potential options, consider contacting Kitroser Lewis & Mighdoll at 561-721-0600 to schedule a consultation.
Source:
investopedia.com/terms/p/payableondeath.asp
