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3 reasons to use a POD account

On Behalf of | May 21, 2024 | PROBATE & ESTATE ADMINISTRATION - Estate Planning

When it comes to estate planning, people often use a will to transfer assets. Some people will also put their assets into a trust, which can then distribute those assets to the beneficiaries. Still others will give gifts while they’re alive, perhaps seeking to reduce the total value of their estate.

But there’s another strategy that you should consider, which is using a payable-on-death (POD) account. This transfers ownership of a financial account, like a bank account, to a beneficiary. What are some benefits of using a POD account?

It’s fairly easy to do

You can add the beneficiary designation to the existing account. When that beneficiary shows the death certificate to the institution, they can take over as the new owner of the account.

It’s unlikely to be disputed

You may also be worried about estate disputes. A will can be disputed by a beneficiary who expected to inherit assets, but was left out, for example. But a POD account likely won’t be disputed because it doesn’t technically qualify as part of your estate after you pass away. It immediately belongs to the beneficiary.

The transfer can occur quickly

Transferring assets through probate and other means can take weeks or even months. If there are disputes, it could take a year or more to resolve. As noted above, a beneficiary can gain access to a POD account in just a few days. This could be highly beneficial for your family if they have financial obligations relating to your passing, like the funeral and other memorial expenses.

As you can see, it’s very important to understand all of the legal tools you have when making an estate plan.