Payable on Death (POD) Accounts
If you're looking to pass money down to someone in order to take care of your future cremation, you might consider setting up a "Totten trust" or
"Payable on Death (POD)" account. A POD account is an arrangement between a bank or credit union and a client (you) that designates beneficiaries (a selected heir or heirs)
to receive the assets in the account when you pass away.
People who opt for POD accounts do so to keep their money out of probate court. If you want money to go to your survivors in the simplest, quickest,
and least stressful way possible, then you want to avoid probate as much as possible. Probate court incurs costs that must be paid by the estate of the deceased and often
dilute the value of any financial assets that otherwise might be passed to beneficiaries.
It's easy to convert an account to a POD account by filling out the proper forms at your bank or credit union. The account holder needs only to notify the
bank of who the beneficiary should be. The bank, on its end, will give the owner of the account a beneficiary designation form called a Totten trust to fill out. The completed form
gives the bank authorization to convert the account to a POD.
The named beneficiary is not entitled to any of the money in the account while the account holder is still alive. Upon death, the beneficiary automatically
becomes the owner of the account, bypassing the account holder's estate and skipping probate completely. (In the event that the owner of a POD account passes away with unpaid
debts and taxes, their POD account may be subject to claims by creditors and the government.)
If the account holder lives in a community property state, their spouse has a claim to half of the assets in the POD account, except the assets that were
acquired before marriage or funds that were inherited.
If the account was jointly owned by more than one person, a named beneficiary cannot access the funds until the last owner dies. In this case, the assets in the
account will be turned over to the beneficiaries named by the last surviving owner.
There are no stipulations on the minimum amount of money that must be available in the account upon death. There are also no limitations to a POD account;
the account holder can spend all the money prior to their death, change the beneficiary on the account, or close the account completely.
To lay claim to the funds, the beneficiary has to present a government ID as proof of identity in addition to a certified copy of the death certificate.
It is important to note that a POD is more powerful than a last will and testament. If a POD account has one individual named as the beneficiary, and
the will of the account holder lists another individual as a beneficiary, the POD-designated beneficiary prevails. The named beneficiary on the POD account is not required to
honor the account holder's last will and testament, which makes it imperative that the individual ensures to change or cancel the POD beneficiary if they have someone else listed
on their will.
Benefits of POD Accounts
Drawbacks of POD Accounts
Simple to open.
The process to access funds for the beneficiary is easy.
It's free to both the account owner who establishes the POD account, as well as to the eventual beneficiary.
There is essentially no limit to how much money can be in the account.
You can't name an alternate (contingent) beneficiary, so if the person you named predeceases you, the assets will likely transfer to the estate,
and then go through probate anyway. (Naming multiple beneficiaries to the account can help offset this drawback.)
POD accounts may result in issues with paying off taxes, debts and other expenses the estate may owe. This can become particularly complex if the
beneficiary differs from the Executor of your estate (who's charged with paying those debts and administering the estate).
If the beneficiary cannot be found or does not want to take ownership of the account, it can become quite complicated to go around the process.
If you have any questions, please contact us:
If you are in immediate need because a death has already occurred, order a direct cremation now.
If a death is imminent (a matter of days or weeks), visit the Cremstar Cremation Cost Calculator
for an estimate and to email yourself a customized "Order Now" link. If you are preparing for the future, visit our Planning Ahead section.
- By phone: (888) 802-0999, available 24/7. (Se Habla Español.)
- By email: [email protected]
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