By Natalie M. Perry, CPA, J.D.
Pay-on-death (POD) or transfer-on-death (TOD) accounts are tools used in the estate-planning process to provide for streamlined administration and avoid probate proceedings on the account owner’s death (POD and TOD referred to collectively for simplicity as POD accounts). POD statutes allow the account owner to implement a POD registration but don’t require it.
Though POD accounts aren’t difficult to implement, when clients use these accounts, advisors should carefully consider the overall planning, including the estate plan, to address all goals and avoid unintended consequences. While POD accounts can provide for a smooth transition to a named beneficiary on the account owner’s death, they can often result in a disproportionate or inadvertent transfer of funds. POD accounts also cause unintended results in certain situations when compared with traditional estate planning.
Read the full article from Trust & Estates magazine here.
