Payable on Death Bank Accounts

Most states' banking regulations allow bank account owners the ability to name a beneficiary of their bank accounts in the event the bank account owner dies. 

POD Account Avoids Probate
A Payable on Death (POD) bank account is not included in the account owner's estate and, therefore, passes to the beneficiary outside of probate. 

How a POD Account Works
A POD account is different from a Joint Account in that the named beneficiary of a POD does not own an interest in the bank account until after the bank account owner passes away. The beneficiary cannot withdraw funds from the account while the owner is still alive and creditors of the beneficiary cannot attach the account to satisfy the beneficiary's debts. 

How a POD Account is Set Up
To set up a POD bank account you will be required to execute a written contract with the bank designating the beneficiary of the account.  Your bank likely has a standard form POD contract, but if not you may want to consult an Estate Planning attorney. The contract allows the owner to retain full ownership of the account during his lifetime.  To change a POD beneficiary, the account owner would need to either close the account or fill out a new account registration card naming the new POD Payee.

Summary of POD Accounts
(1) Easy and Free to name a beneficiary (usually just by listing the beneficiary on the signature card as "P.O.D. Payee";
(2) P.O.D. Payee has no current interest in your bank account;
(3) Unlimited amount of money may be left to beneficiary using a POD;
(4) Easy for the beneficiary to claim the funds upon death of account owner.  In most states all that is required is to show a death certificate to the bank;
(5) In most states, however, you cannot name an alternate beneficiary.

For information on naming minor children as beneficiaries to a POD account read my article POD Accounts and Minor Children.
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