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Using Payable on Death Accounts as an Estate Planning Tool


One concern that crops up with estate planning is providing immediate cash to your loved ones when you die. Although they might inherit the bulk of your estate in probate, the reality is that probate can be a lengthy process. Your spouse or children could be waiting months—possibly longer—before receiving any money.

There are different ways to ensure that your loved ones gain immediate access to cash. Funding a life insurance policy is one option. However, a better choice for many people is a payable on death account, or POD. Our estate planning lawyers in the Villages have set up bank accounts as PODs, which can provide easy access to desperately needed funds after you pass.

What Is a Payable on Death Account?

POD accounts are a lot like life insurance. You will name a beneficiary to the account, who will inherit the money in the account when you die. You can name more than one beneficiary if you like.

After you die, the beneficiary must present proof of your death to the bank, along with proof of their identity. This all happens outside of probate, which means it is typically much faster.

What Accounts Can You Make Payable on Death?

Florida Statute § 655.82 provides for the ability to make a payable-on-death designation to any “contract of deposit” between you and an institution, including a savings account, checking account, certificate of deposit, or share account.

The law also allows two or more people to hold an account jointly. When one account holder dies, the surviving joint owners remain in control of the account. It only passes to beneficiaries when all of the owners die.

Consequently, married couples can designate a joint bank account as POD. The account does not pass to a beneficiary until the last owner dies.

Can the Beneficiary Gain Access While I am Living?

No. The account is only payable on your death. The beneficiary has no ability to touch assets in the account while you are alive. The law is clear on this.

For this reason, don’t set up a POD with the expectation that children or others will use the funds to take care of you. If that’s your goal, you will need to use different planning tools.

Are There Disadvantages to Using POD Accounts?

There could be. One concern is that your beneficiary will only receive what is in the account. If you drain it while living, then there is nothing (or very little) for your beneficiary to collect after you die. This could also happen if you become incapacitated and someone is given control of your finances. They could use some or all of the funds in the account for your care, leaving little to be inherited when you pass.

For this reason, you want to use POD accounts as part of a holistic estate plan. That way you can be sure that you leave something to your loved ones. Simply designating bank accounts as POD might be inadequate, depending on your goals.

Contact Our Estate Planning Lawyer in The Villages

Millhorn Elder Law Planning Group is prepared to use any estate planning tool if you will benefit from it. Call us today to schedule a free consultation at 800-743-9732.






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