• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sexton, Bailey Attorneys, PA

SEXTON BAILEY ATTORNEYS, PA an Arkansas Estate Planning & Trust Information Center

Sexton, Bailey Attorneys, PANorthwest Arkansas Estate Planning Attorneys(479) 443-0062

Client Vault
  • Home
  • Our Firm
    • Our Firm
    • About the American Academy
    • Advantages of Working With Our Firm
    • Attorney and Staff Profiles
    • News & Events
    • Our Reviews
    • Speaker Connection
  • Estate Planning
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Incapacity Planning
    • Legacy Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
  • Webinars
  • Practice Areas
  • Resources
    • DocuBank
    • Elder Law Reports
    • Estate Planning Resources
      • Estate Planning Articles
      • Estate Planning Checkup
      • Estate Planning Definitions
      • Estate Planning Reports
      • Incapacity Planning Definitions
      • Is Your Estate Plan Outdated?
      • Top 10 Estate and Legacy Planning Techniques
    • FREQUENTLY ASKED QUESTIONS
      • Estate Planning
      • Frequently Asked Questions for Families Without an Estate Plan
      • Legacy Wealth Planning
      • Medicaid Planning
      • Pet Planning
      • Trust Administration & Probate
    • Newsletters
    • Trust Administration & Probate Resources
      • Bereavement Resources
      • How to Know if You Need Extra Help With Your Grieving
      • Loss of a Loved One
      • The Mourner’s Bill of Rights
      • Things You Need To Do When a Loved One Passes Away With a Trust
      • Things You Need To Do When a Loved One Passes Away With a Will
      • Trust Administration & Probate Definitions
  • Reviews
    • Our Reviews
    • Review Us
  • Contact Us
  • Blog
Home / General / What Is a Payable on Death Account?

What Is a Payable on Death Account?

October 26, 2016 by Audra Bailey Wilcox Leave a Comment

This is an article from the Law Offices of Michael Robinson (http://www.mrobinsonlaw.com/) in Naples, New York, that we thought others may find helpful.

elderly-parentsThere are many different ways to facilitate future asset transfers and some of them are more effective than others. Before you make any decisions, you would do well to discuss your options with a licensed estate planning attorney.

People sometimes make assumptions without enough information, and they accept incomplete solutions. With this in mind, let’s look at payable on death accounts.

POD or TOD Accounts

Payable on death accounts are alternately referred to as transfer on death accounts. You can open these accounts at banks and many brokerages. When you open a payable on death account, you name a beneficiary. After you pass away, the beneficiary inherits the assets that remain in the payable on death account.

The process of probate is a factor if you leave someone an inheritance in your last will. The will must be admitted to probate, and the heir would not receive his or her inheritance until after the process has run its course. With a payable on death account, the transfer of ownership would take place outside of probate.

When you first hear about payable on death accounts you may be enamored, but there are some potential drawbacks to take into consideration.

Incomplete Solution

A payable on death account is not a complete estate planning solution. It is unlikely that all of your objectives can be accomplished through the utilization of a POD account.

Firstly, you may want to leave different sums of money to multiple different heirs. You may be able to add multiple beneficiaries depending on the rules of the institution in question. However, the institution may require you to allow for equal distributions of assets that remain in the account. In other words, you can’t have it your way.

There is also the matter of incapacity. A significant percentage of senior citizens become incapacitated and unable to handle their own affairs late in their lives. The beneficiary cannot assume ownership of the funds until after you pass away. There is no way to account for the possibility of incapacity when you create a payable on death account.

There are no tax advantages to be gained when you use one of these accounts and payable on death accounts do not provide asset protection.

There is also the matter of the death of a beneficiary. If one beneficiary dies, who gets that share? The other beneficiaries may want to split it, but the descendents of the deceased beneficiary may have other ideas.

  • Author
  • Recent Posts
Audra Bailey Wilcox
Audra Bailey Wilcox
Attorney at Sexton, Bailey Attorneys, PA
Audra Bailey Wilcox
Latest posts by Audra Bailey Wilcox (see all)
  • Bill Nye the Science Guy on Wearing Masks in Public - July 11, 2020
  • Low-Interest Loans: An Estate Planning Technique - June 23, 2020
  • Irrevocable Medicaid Trusts - June 16, 2020

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Sexton, Bailey Attorneys, PA

Is Your Plan Outdated?

Subscribe to Our Blog

Office Address

Fayetteville
2766 Millenium Drive
Fayetteville, AR 72703
Phone: (479) 443-0062

Office Address

Prairie Grove
1100 Division Street, Suite 4
Prairie Grove, AR 72753
Phone: (479) 846-6026

Office Address

Farmington
6 West Main
Farmington, AR 72730
Phone: (479) 267-4441

Office Hours

Monday9:00 AM - 5:00 PM
Tuesday9:00 AM - 5:00 PM
Wednesday9:00 AM - 5:00 PM
Thursday9:00 AM - 5:00 PM
Friday9:00 AM - 12:00 PM

Map

map for office
  • Facebook
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

footer-logo

© 2021 American Academy of Estate Planning Attorneys, Inc.