Upon your death, your beneficiaries may present a copy of your death certificate to the bank or other financial institution. So long as they can validate your death and verify their identity, they are entitled to receive the account’s assets without any need to initiate probate or petition a court for approval.
A transfer-on-death account (TOD) is very similar to a payable-on-death account. However, TODs are typically only available for certain investment funds and securities accounts.
POD Account Considerations
POD accounts are a convenient and cost-free means to bypass probate on many financial accounts. However, the establishment of a POD must always be reconciled with other aspects of your estate plan.
Before placing too much faith in a POD, talk to your estate planning attorney about the following:
- Ensuring that your POD accounts are consistent with the terms of your will
- Structuring your POD to include alternative beneficiaries and to avoid over- and under-inheritance
- Strategically reallocating funds to provide your estate with the resources necessary to either facilitate trust administration or pay for probate
Although POD accounts have clear-cut advantages, they must be regularly reviewed and should always be considered within the context of a more comprehensive estate plan.
