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Payable on Death Beneficiary for Accounts

Planning your estate doesn’t have to be expensive or complicated. You can transform your bank accounts into an estate planning tool by designating a beneficiary for your checking, savings and other deposit accounts. Simply ask your banker for their payable on death (POD) beneficiary form.

Payable on Death Beneficiary for Accounts

POD accounts function like an informal trust. Some banks even refer to these accounts a Totten or tentative trusts. After your death, the account beneficiary avoids probate and can claim the money directly from your bank. During your lifetime, the beneficiaries have no rights to the account. You can spend the money, close the account or change your beneficiaries. The account will function just as it did before you listed a beneficiary.

Who Can be Your Beneficiary

The beneficiary rules for POD accounts are very flexible. You can choose to have one beneficiary for several accounts or multiple beneficiaries for one account. Nonprofit organizations can serve as your beneficiary. Just be certain they are recognized as a charitable entity by the Internal Revenue Service. Depending on the laws of your state, you may be able to designate an alternate beneficiary, in case your first named beneficiary dies before you. If there are no living beneficiaries at the time of your death, the account will pass through probate.

What Accounts Can Have a Beneficiary

You can name a POD beneficiary for your checking and savings accounts, money markets, CDs and U.S. Savings Bonds. But you will probably need to complete a beneficiary registration form for each account. Joint accounts, such as held by a married couple, can also be transferred into POD account. The beneficiary will only receive rights to the assets after the last account owner dies.

Stocks and other securities can be transferred by setting up transfer on death (TOD) registration on the account. Most states have adopted the Uniform TOD Security Registration Act, but brokerage firms can still choose not to offer TOD registration.

How Do You Claim A POD Account?

Claiming a POD account is a straightforward process. The beneficiary goes to the bank or credit union holding the account and presents a copy of your death certificate. They will also need to show valid identification and fill out transfer forms. Some states have a short waiting period, but otherwise the beneficiary can claim the funds immediately.

TOD beneficiaries must take steps to re-register the securities in their names. This typically involves sending a copy of the death certificate and an application for re-registration to the transfer agent

Be aware, POD accounts are subject to outside claims. So you can’t use a POD account to avoid paying your debts or to disinherit a spouse. You must leave enough money in your estate to tie-up your affairs. Plus if you live in a community property state, your spouse has a right to half of your assets, including those only listed in your name.

Tax Issues with POD Accounts

After you die, estate or income taxes may be left owing. For example, if you are working at the time of your death, your estate administrator will file your last tax return. It is important that your will or living trust state if the POD account beneficiary is required to use funds to cover any tax liability.

Your beneficiary may also be subject to an inheritance tax depending on the laws of your state, and you family relationship. In most states, surviving spouses are exempt from inheritance tax. But unrelated individuals are frequently taxed on an inheritance.

Free Consultation with a Utah Estate Lawyer

If you are here, you probably have an estate issue you need help with, call Ascent Law for your free estate law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

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Michael Anderson

About the Author

People who want a lot of Bull go to a Butcher. People who want results navigating a complex legal field go to a Lawyer that they can trust. That’s where I come in. I am Michael Anderson, an Attorney in the Salt Lake area focusing on the needs of the Average Joe wanting a better life for him and his family. I’m the Lawyer you can trust. I grew up in Utah and love it here. I am a Father to three, a Husband to one, and an Entrepreneur. I understand the feelings of joy each of those roles bring, and I understand the feeling of disappointment, fear, and regret when things go wrong. I attended the University of Utah where I received a B.A. degree in 2010 and a J.D. in 2014. I have focused my practice in Wills, Trusts, Real Estate, and Business Law. I love the thrill of helping clients secure their future, leaving a real legacy to their children. Unfortunately when problems arise with families. I also practice Family Law, with a focus on keeping relationships between the soon to be Ex’s civil for the benefit of their children and allowing both to walk away quickly with their heads held high. Before you worry too much about losing everything that you have worked for, before you permit yourself to be bullied by your soon to be ex, before you shed one more tear in silence, call me. I’m the Lawyer you can trust.