The Payable on Death (POD) account is a special type of bank account recognized under U.S. law. POD accounts can be set up for checking accounts, savings accounts, money market accounts, certificates of deposit, as well as U.S. savings bonds.
Who has access to a POD account?
During the life of the POD account owner, the named beneficiaries by the owner will have no access or control over the POD account; only the owner will have access and control over the funds in the account. Additionally, the owner can change the beneficiaries of the POD account at any time during their lifetime as long as they are alive and capable of making changes to the account.
How many owners can access a POD account?
POD accounts do not have to be created by just one person. Two or three or even more people can have access to a POD account while any of the owners are alive, and then when the last owner dies, the remaining amount in the POD account will be paid out to the beneficiaries named by the last surviving owner.
POD accounts do not have to be paid equally to beneficiaries
The owner of a POD account does not have to leave the account equally if more than one beneficiary is named. Instead, if more than one beneficiary is named by the POD account owner to receive the remaining assets in the account after the owner’s death, the beneficiaries will receive the account balance in the percentages specified by the owner on the beneficiary designation form.
What happens if the named beneficiary dies before the POD account owner?
If the named beneficiary designated by the POD account owner dies before the owner, the remaining amount in the account will be paid equally to the surviving beneficiaries. For example, if the owner names four beneficiaries and one of the named beneficiaries dies before the owner, and the owner has not made any changes to the beneficiary designation in the account, the remaining amount in the account will be paid equally to the three surviving beneficiaries. But what happens if the owner names only one beneficiary and that beneficiary dies before the owner, and the owner does not change the beneficiary designation? Then the remaining amounts in the POD account will become part of the estate assets of the account holder.
Beneficiary designations
Independently of POD bank accounts and savings bonds, some states recognize payable-on-death designations, transfer-on-death designations, or beneficiary designations.
Sources:
– Fifth Third Bank. “Estate Financial Planning Has Nothing to Do With Your Wealth.”
– Bank of America. “Resources and Information,” Page 3.
– AllLaw. “Claiming Money From a Payable-on-Death Bank Account.”
– FindLaw. “Bank Account Beneficiary Rules.”
– Texas Constitution and Statutes. “Estates Code – Chapter 113. Multiple-Party Accounts.”
– Omaha Federal Credit Union. “How to Fill Out the Designation of Beneficiary Form.”
– Nolo. “If a Beneficiary Dies Before You Do.”
– Ohio Laws and Rules. “2131.10 Payable on Death Accounts.”
– Alaska Court System. “Transfer on Death Deed.”
Source: https://www.thebalancemoney.com/what-is-a-payable-on-death-or-pod-account-3505252
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