Can payable on death accounts help protect your wealth?

As a San Jose resident works toward retirement, they may consider the different ways that their assets will be divided and distributed at the time of their death. Many individuals choose to execute estate plans to ensure that their intentions are honored, and their assets are distributed according to their own wishes. During the estate planning process, many individuals work with estate planning lawyers to be sure they are making legally and financially sound decisions.

One concern that can plague the minds of estate planners is losing wealth at the time of their death to taxes and probate. Asset protection planning is an important component of estate planning and should be a part of individuals’ conversations with their own legal representatives. One option that Californians may consider to protect their end of life wealth is the payable on death (POD) account.

What is a POD account?

Payable on death accounts are regular financial accounts that have been given special designations. They can be investment accounts, checking accounts, or others. When the owner of a POD account dies, the assets in that account transfer directly to a beneficiary and do not have to be included in the probated estate of the decedent.

Why use a POD account?

A POD account can help reduce the size a decedent’s estate as it creates an automatic transfer to a named beneficiary. When a POD account owner dies, the assets are no longer their property and become the property of the beneficiary. Since probate can take time to administer and can cost money to complete, POD accounts get beneficiaries their assets faster and without the expenses and delays associated with probate.

Different financial institutions have different processes for setting up POD designations. It is important that an individual understands what will happen to their assets when they set up a POD designation. This post does not provide any legal advice. Individuals with questions about POD accounts should talk to their trusted estate planning attorneys.