How Can Beneficiary Designations Work for You?

A beneficiary designation passes on wealth in a simple way. Referred to as Payable on Death (POD) in reference to financial accounts and Transfer on Death (TOD) in reference to investment accounts, this vehicle provides an uncomplicated way to transfer an account after your death. This article is focused on POD financial accounts. The specific rules and procedures differ from state to state and institution to institution, but here’s a general overview of bank accounts with a POD clause.

Control of the bank account during your lifetime
If you’re concerned about control, be assured that you retain complete control of the bank account during your lifetime. The account owner is not required to leave any amount in the account for the POD beneficiary and, unless you’ve also set up your POD beneficiary as a cosigner, the POD beneficiary does not have access to the bank account while you’re alive.

Simple transfer process
The account transfers to your named POD beneficiary very quickly and easily after your death. The designated beneficiary typically just provides the bank with your death certificate and proves their identity for the transfer to take effect.

The power of a POD
Generally, the POD designation supersedes any will designation. In fact, the POD designation keeps the bank account out of the probate process entirely. Further, a POD designation will usually override all outside estate plans and agreements, including a divorce agreement or a prenuptial agreement. Of course, you can change the designation during your lifetime. So, if you choose to add a POD to your financial accounts, be sure to review and update your POD designations regularly.

How to add a POD designation
You can simply include the POD designation when you open a new bank account. To add the designation to an existing account, simply reach out to the financial institution for information. It’s a straightforward process, likely to include showing your own identification and providing the beneficiary’s information. Oftentimes you can manage the whole process online.

Integrate POD designations with your overall estate plan
A POD designation can be an effective way to ensure your family can take care of the expenses that come up immediately after your death. But this tool may not be the way you want to pass along a significant amount of your money. Your estate may benefit from the tax planning and asset protection strategies available with a more comprehensive estate plan.

Work with a Florida Estate Planning Attorney
We can help you integrate POD designations into your overall estate plan. Call our office at 321-804-2915 or fill out our contact form and we will be in touch to schedule a meeting.