What are the advantages of a POD account?

A payable-on-death (POD) account is a bank account that has a beneficiary designation. Essentially, you have the ability to use a Totten trust – the technical name for the necessary paperwork – and transform your personal bank account into a POD account if you would like. You can then select any beneficiary, giving them a right to those funds when you pass away.

One of the major advantages is that the contents of the account transfer into the beneficiary’s name immediately. This keeps those assets out of probate. Probate can take longer, it may be more expensive and there is the possibility of a dispute between beneficiaries. To avoid this, rather than putting the bank account in your will, you can just create a POD account and specify exactly who you want to have control of that account.

Can they access the account immediately? 

No, one of the other benefits of a POD account is that it does not actually take effect until you pass away. This means that you are not giving up control. You can still use that account just like you do right now, and your beneficiary cannot access it and use your money without permission. Once you pass away and they provide the proper paperwork to the bank, however, then they become the owner of the account.

Setting up your estate plan

A POD account is just one estate planning tool that you may want to consider. Be sure you know about all of the legal options you have while setting up your plan, especially when considering complex financial assets and trying to avoid disputes between your family members.