What is a POD account for estate planning purposes?

A POD account is another name for a Payable On Death account. Due to the paperwork that is used to set this up, it is also sometimes referred to as a Totten Trust. It can be an important part of your estate plan as you pass assets on to the next generation.

You can often create a Payable On Death account using a bank account that you already own. You simply take the account that you already hold, add a beneficiary designation to it and update the paperwork with your financial institution. When you pass away, the beneficiary that you have selected then takes over control of the account.

Avoiding estate disputes

One reason to do this is if you are concerned that your beneficiaries are going to be involved in an estate dispute. A Payable on Death account doesn’t have to go through probate. Your beneficiary gets control of the account and the money within it almost immediately upon demonstrating to the financial institution that you have passed away. If you’re concerned that your beneficiaries may argue over who should get specific assets, this is one way to avoid it.

Getting the money to your beneficiaries more quickly

Another major benefit of Using a Payable On Death account is that it transfers money to your beneficiaries much faster than making them wait through the probate process. That could take months. If you want them to have the money quickly, perhaps just in a few days, this is one way to give them access. Doing so may be beneficial when they are covering important financial costs at this difficult time.

There are many different financial tools you can use when drafting an estate plan. Just be sure you carefully consider which ones will be best for your family. Call or contact us for your free initial consultation.