Payable-on-death (POD) accounts are one of the options for transferring assets to designated people or entities without the need for probate. Naming payable-on-death account beneficiaries is part of a comprehensive approach that you can take advantage of in Coral Gables.
If you want to take advantage of a POD, you need to understand exactly how it works in your particular case. An experienced estate planning attorney can provide the required guidance with this beneficiary designation and help you make the right decision.
A POD account is a type of bank account that allows the account holder to name beneficiaries to inherit the funds upon the owner’s passing. The transfer occurs automatically and bypasses the probate process. While the account holder is still alive, the beneficiaries do not have any legal rights to the account, and the owner can withdraw funds, close the account, or change the beneficiaries. The common types of POD accounts are:
An account holder in Coral Gables does not have to name family members as payable-on-death account beneficiaries. They can also designate charitable organizations, friends, or any other individuals or entities.
Avoiding probate is a major advantage of setting up a POD. However, many complications can surround the process of becoming the owner of the funds.
While payable-on-death account beneficiaries automatically receive access to the funds, they are not protected from paying off debts. If the account owner left unpaid debts and taxes, the funds for a POD account can be used to cover them.
If more than one person is an owner of the POD account, the beneficiary does not receive the funds until they all pass. If one owner passes away, the other one has the right to name their beneficiaries. Even if these beneficiaries are different from those named by the first owner, they become the only ones with the legal rights to access the funds.
A POD does not allow naming an alternate beneficiary. If the named beneficiary dies before the account holder, and no changes are made, the funds may revert to the estate and go through probate. This is why regular review and updates of beneficiary designations are important.
One of the main benefits of naming beneficiaries on a POD account is the right to increase the coverage limit under the Federal Deposit Insurance Corporation (FDIC). The standard coverage for assets per person in each financial institution is $250,000.
With POD accounts, the owner can name different people as beneficiaries. If they have five POD accounts at the same bank and name a different person on each one, the FDIC can insure up to $1,250,000 total.
Understanding how naming payable-on-death accounts work can help you make smart estate planning decisions. You can help your family avoid probate and make sure your funds go to the designated people or entities. However, to ensure proper distribution, you must discuss your plans with a qualified estate planning attorney.
At Veliz & Associates, P.A., we work hard to provide top estate planning services to the members of our community. Our Coral Gables-based lawyer can help explain how POD accounts work in your case, review other options, and ensure timely beneficiary updates. Call us to discuss your estate plans at any time.
We evaluate your case and determine how we might be able to help.
We will meet with you to discuss your next options and lay out a plan.
Our team guides you throughout the process so you feel confident about your choices.
(305) 250-9917