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A POD (Payable on Death) or TOD (Transfer on Death) account is a type of bank account where the account owner names a beneficiary to receive the account assets when the owner dies.

Key points about these accounts include:

• Beneficiaries can be anyone, including minors, non-U.S. citizens, and organizations.

• The beneficiary needs to provide a certified copy of the deceased’s death certificate to the bank or brokerage firm.

• The assets are transferred immediately upon the account owner’s death.

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Pros

• Probate avoidance: By sidestepping probate, POD and TOD accounts streamline the distribution of assets post-death, allowing beneficiaries to gain access to these funds with greater speed.
• Simplicity: Setting up these accounts is generally straightforward, often requiring just the completion of a form at the bank or brokerage firm.
• No additional cost: There’s usually no cost to establish these accounts, aligning with the needs of individuals seeking a cost-effective method of transferring assets.

Cons

• Joint ownership complexity. When an account is jointly owned, the beneficiary of the account won’t receive the assets until the surviving owner(s) die. The same applies to accounts owned in states with tenancy by the entirety for married couples.
• Naming alternative beneficiaries: These accounts do not allow for the nomination of alternative beneficiaries if the primary beneficiary or beneficiaries predecease the account owner. This could lead to the assets being subjected to probate if the primary beneficiary is no longer alive at the time of the account holder’s death.
• Transfers only happen after death: These accounts stipulate that the person must pass away before the beneficiary can access the funds – a restriction that could prove troublesome if the beneficiary requires access to these assets during the account holder’s life or if the account owner becomes incapacitated during their lifetime.

ESTATE PLANNING: https://medicalexecutivepost.com/2025/03/23/estate-plans-when-physicians-should-review/

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Filed under: "Ask-an-Advisor", Estate Planning, Glossary Terms, Health Economics, Taxation | Tagged: beneficiary, Estate Planning, Financial Planning, payable, personal-finance, POD, PODs, probate, ranser, TOD, TODs, transfer, trusts, wills |