If you have recently opened a checking, savings, or brokerage account, you likely remember being asked to name a payable-on-death beneficiary. Every institution has its own rules that are often amended to accommodate both state and federal law. However, even where nominating beneficiaries is optional, selecting an heir could enhance your estate plan while making succession easier.Payable-on-death accounts explained  | California Estate Planning Lawyer

The Law Firm of Kavesh, Minor & Otis, Inc. has spent decades helping California families protect their best interests. Our experienced Los Angeles and Orange County estate planning lawyer team could help you establish and review your payable-on-death accounts, incorporating them into a more comprehensive plan that keeps your assets safe from probate.

Payable-on-Death Accounts

A payable-on-death account (POD) is any financial account that lets you name one or more beneficiaries. In many banks, you are presented with an opportunity to nominate beneficiaries the same day that you open an account. For the remainder of your lifetime, you retain exclusive control over your POD account—your heirs cannot access your account without being named joint account holders, and you are free to add, alter, or remove beneficiaries as you deem fit.

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.

Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.