Should You Choose A POD Or TOD Account For Florida Estate Planning?

You know it’s time to start planning for your estate but the process is so confusing you don’t know where to begin. One segment of planning involves thinking about your future health needs, another involves thinking about your property, but what about your finances? Perhaps you have heard of a payable on death account or transfer on death account. What is the difference? Is this a necessary component of Florida estate planning?

What exactly is a POD Account?

A POD account is a payable upon death saving account. The account only exists for the  purpose of distributing a person’s assets and financial accounts after they pass away. If a payable on death account is linked to a trust it is possible that probate can be avoided. This is advantageous because probate administration can take months if not years depending on how complicated a person’s estate was and whether they had their affairs in order. To create a POD account, you must name a beneficiary to the contents of the account, and how they are to be paid after you pass away. Your POD account should coincide with what you have indicated in your will in regards to financial asset distribution. If there are conflicting terms in the POD account and your last will and testament, what is indicated in the POD account will prevail. You should take the time to determine if you want multiple beneficiaries to inherit what is held in the POD account or if all assets will flow to one person. In that case you will still want to list a substitute beneficiary should you outlive your beneficiary.

What about TOD Accounts?

TOD accounts are transferable on death accounts. The difference between TOD and POD accounts is what assets are held in the account. The grantor can place investment funds in a TOD account such as pension benefits, dividends from stock options, 401K accounts or Roth IRA’s. Multiple beneficiaries can be named to benefit from a TOD account. The grantor can indicate what distributions the beneficiaries should receive and in what percentage. However, nothing can be distributed from a TOD account until the grantor passes away. Many people find this restrictive and decide that placing assets in a revocable trust offers them more autonomy over distribution of their assets. However, if the grantor has no intention of accessing the assets once placed in the TOD account, it may be a good option. A TOD account also avoids probate.

Contact the Villages Financial and Estate Planning Attorneys at Millhorn Elder Law Group

Thinking about your finances is a major task, especially if you have multiple checking, savings, and investment accounts. But the more you have to distribute, the more thought you should give to how you want to effectuate your estate plan. Putting a plan in motion now could save your loved ones both time and expense by avoiding probate. Don’t put it off another day. Our attorneys at Millhorn Elder Law Group have experience in all facets of estate planning and serve clients throughout The Villages and Oxford. Call today to schedule a comprehensive consultation and put a plan in motion.