Transferring Accounts at Death

Transferring accounts at death can be accomplished a few different ways. The first is to name a living trust as the owner of the account. The second is to use a POD or TOD designation. POD stands for payable on death, this is typically used to transfer bank accounts to a listed beneficiary. TOD stands for transfer on death; this is used to transfer investment accounts at death. In this article, we will go over some benefits and considerations you should consider when setting up PODs and TODs.

Benefits

PODs and TODs are very simple to implement and come at no cost to you. Transferring accounts at death is easy, the beneficiary just needs to provide the financial institution with a death certificate. Accounts with these designations on them will avoid probate and pass to your beneficiary without a will.

Considerations

Whether or not you can utilize PODs or TODs will depend on the state you live in, so you should check your state’s laws. Additionally, these funds are not safe from creditor claims. If the estate does not have enough funds to pay creditors, they may be entitled to make a claim on TOD and POD accounts. Lastly, when transferring accounts on death beneficiaries receive the assets outright. This means the funds have no protection for bankruptcy, divorce, or creditors like they can through a dynasty trust.

Utilizing POD and TOD Accounts

If you decide that transferring accounts at death through PODs or TODs is right for you, schedule an appointment to meet with your banker. Typically, you need names and social security numbers of the people you would like to be beneficiaries. You will want to make sure your beneficiaries are up to date so there is no need for probate. If you want more control over how and when a beneficiary receives funds you can do so by setting up a revocable living trust.

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