Estate planning is an important tool when you want to make sure your wishes are carried out as you intended. If you’ve ever been through the probate process or had friends talk about the nightmares of improper estate planning, you know how important it is.
A payable-on-death, or POD account, can be a great tool to add to your estate planning process, especially if you want your beneficiaries to collect their inheritances quickly. Let’s explore what a POD account is and why it could be beneficial to your family.
What’s a POD Account?
A will is a great tool to simply state how you want your assets to be distributed, but it’s subject to the probate process. The probate process is efficient but it’s public record and can be contested by anyone that has a stake in your property. Contested wills take time and money and can hurt those that you were trying to protect in the first place.
On the other hand, a POD account allow your assets with those institutions to pass on directly to the beneficiaries you list quickly and without going through probate. Also, any account with beneficiaries such as IRA’s, Roth IRA’s, annuities, Employer Retirement Plans, and life insurance policies automatically pass to your beneficiaries without going through probate by contract.
Plus, a POD account can be easily set up through your bank!
Related: Estate Planning and Legal Documents: When DIY Could Be a Bad Thing
When Does a POD Account Make Sense?
If you have a smaller, uncomplicated estate, you may be able to save money and time by going through a POD account rather than setting up a trust for your beneficiaries.
Make a list of the things important to you and revisit the beneficiaries listed on your accounts. Next, look at your net worth and financial plan. What do you want to happen when you are no longer able to control your finances? Do you want to avoid a long payout time for your heirs, and is that possible considering your assets?
Your financial planner can help you decide whether a POD account makes more sense over a trust or other estate planning tool. They can also answer any questions you may have about the process of creating your estate plan.
Learn More with Clarity
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