Payable On Death (POD) Account

Payable On Death Accounts, or PODs, are any checking or savings accounts where the owner has designated a beneficiary upon death.

Payable on death or POD accounts are any normal checking or savings accounts with a designated beneficiary, and they're a fantastic way to keep significant amounts of money out of the process known as probate.

Because of this functionality, they are also known as a "poor man's trust", but there's no shame in that. They work great.

Unless you have a reason to need backup beneficiaries or have a pretty big estate that a lawyer-guided trust would make more sense for, POD accounts are a respectable way to get cash to your family faster after you pass away.

Most banks offer this option, and it's as simple as filling out a short form that essentially says, "When I pass away, please give the money in here to this particular person."

This designation doesn't come into effect until after the account holder passes, meaning the account holder can still close the account or choose a different beneficiary at any point before their death.

If you are the recipient of a POD account's funds, you just need to drop by the bank, prove you are who you are, and prove that the person who owned the account has passed away.

You can do this by yourself or with the executor, executrix, or personal representative named in the will (if a will existed). You don't have to involve them, but it can be nice for them to know what happened to that bank account so they aren't wasting time looking for it.

Why are POD accounts useful?

The advantage of POD accounts is that the money in the account can avoid probate, passing directly to the designated beneficiary without any fuss. This is true even if the account owner died intestate, or without a will.

Probate slows down the flow of money from the deceased to their heirs and beneficiaries after they pass, and that's why it's best for people to do what they can to place assets in certain account types and financial instruments that bypass probate. POD accounts and TOD accounts are two of the best and simplest examples of how to do this. Trusts are another.

This work spares executors future time and effort, and helps lower the estate's total probate asset value, which can facilitate faster probate.

How do I create a POD account?

Again, it's super simple. Just call or contact your bank to figure out what form you need, fill it out, and there you go. You have a POD account.

James has a brokerage account at his bank. Years before he passed, he filled out a short form with his credit union to name his daughter, Sarah, as the beneficiary. After James passed away, Sarah went to the bank with her ID and a copy of the death certificate, and the money/assets in that account was directly transferred to her without needing to involve the probate court.