When planning your estate, you may be advised to set certain types of property aside to keep it away from probate. Probate can be lengthy, confusing, and expensive, and when you can keep property away from the probate court's oversight, your estate plan is benefited in several ways. One easy way to remove your property from probate's grasp is by using a special account designation. Read on and learn more about payable-on-death (POD) designations.
How Probate Works
Unless you've made arrangements like a POD, all of your property will be tied up in probate court for six or more months after your death. When it comes to estate property, that includes your home, bank and investment accounts, vehicles, and more. As far as probate is concerned, your estate also includes your debts and that is one reason that probate is necessary in almost all cases. As soon as the will is filed in probate court, bank accounts and other estate assets are frozen and held in a state of suspense until the process is finished. That means your loved ones have no access to funds that might be needed to pay final expenses or to maintain the family home during probate.
How a POD Works
You can keep your checking, savings, and investment accounts out of probate using a POD designation. A POD involves choosing who you want to receive the account contents and completing a document at your bank or brokerage office. You can have one or more names added to your account and the funds in the account become immediately available as soon as a few weeks after a death. Your beneficiaries would simply present the death certificate at the bank or brokerage along with identification and the money is paid right away. If you designate more than a single beneficiary, the funds in the account is equally divided among all designated. Many financial institutions refer to the names you add to the POD as alternate payees.
What Else To Know About a POD
- You will need to have the Social Security numbers and addresses of your alternate payees when you complete the paperwork.
- A POD can be modified or canceled at any time before the account owner dies.
- A POD may be known by other names but they perform the same basic function: transfer-on-death, informal trust, or tentative trust.
A POD is just one of many estate instruments that keep your assets out of probate. Speak to an estate planning lawyer to find out more about a POD and more.