Did you know that you can add a beneficiary designation to your bank account? You can turn it into a payable-on-death account. When you pass away, then the beneficiary takes over control.
Of course, you could always just list the money from that bank account in your will. When you pass away, your estate will go through probate and the estate executor will transfer the money to your beneficiary. If this accomplishes the same goal, what are the benefits of using a payable-on-death account instead?
1. Keeping the funds out of probate
One of the advantages is that the money doesn’t have to go through probate if it’s in a POD account. As a result, the beneficiary can often use the money much sooner. Even if the entire probate process takes months, that beneficiary may get access to their POD account in just a few days. It would generally take the estate executor a few days just to begin the process of inventorying assets, so a POD account speeds things up substantially.
A second benefit of avoiding probate is that the odds of an estate dispute are much lower. If you leave assets to someone in a will, another beneficiary could theoretically challenge the will. But they cannot challenge your POD beneficiary designation, so the odds of conflict between your descendants are lower.
2. Setting up your estate plan
Wills and POD accounts are just two aspects of estate planning that you want to consider. Be sure you know about all the options you have as you draft your plan. It can help to work with an experienced legal team as you explore these options.
