A payable-on-death (POD) account can be set up at your local financial institution. You may already have a savings account containing a significant amount of financial assets. You can convert this into a payable-on-debt account and choose a beneficiary. If you pass away, then your beneficiary becomes the owner of the account.
You do not have to worry that you are giving them access early. They cannot withdraw your money or access your account until you pass away. You are simply setting them up to take over as the account owner when you are no longer able to do so. Here are two advantages of using this structure.
They get the money sooner
One reason why people do this is that the beneficiary can get the money much sooner than if it was passed down through an estate plan. This is especially true if the assets have to go through probate, which could take weeks or even months. But a payable-on-death account could give the person access to the money in just a few days. This can be very helpful, especially if they’re trying to pay for a funeral and cover other costs.
The odds of a dispute are lower
Next, estate plans often cause disputes among beneficiaries. They may disagree about the validity of a will, for instance, or whether or not it really reflects what an elderly person wanted. But since a payable-on-death account isn’t part of your estate, the beneficiary designation can’t be challenged.
This is just one of the tools you can use when making an estate plan. Carefully consider all of the options at your disposal.
