If you have certain types of financial accounts, you may be able to turn them into accounts that are payable on death. These are often called POD accounts. You can also open accounts with this designation from the very beginning, but you don’t necessarily have to do so. You could convert a checking account that you’ve been using for years, for example.
What happens when you alter the account to make it a POD account is that you pick a beneficiary. If you pass away for any reason, this beneficiary immediately takes over ownership of that account. They have no ownership beforehand, so this isn’t the same as having a joint account with someone else – a setup many people use with their spouses. Instead, their ownership only begins when you pass away.
One of the big advantages of doing this is that it means the account avoids probate. If you passed away and the account just became part of the rest of your estate, it has to go through probate to be divided. A POD account does not because the intended beneficiary immediately owns it and no one else has any claim to it.
Keeping things simple
An account like this is also a very efficient and simple way to pass assets on to the next generation. Maybe you want to make things go quickly. Maybe you’re worried about disputes over a will. Maybe you think heirs are going to fight over assets or disagree about how to divide them. A POD account simply transfers the entire account to one person, so it avoids a lot of these questions.
Setting it up
If you are interested in an account like this, be sure you know what steps to take to set everything up. This is just one part of estate planning, and you need to consider all of your options.