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What Is a “Payable on Death” Account?


Normally when you die, the money in your bank account is considered a probate asset, meaning it is distributed in accordance with the terms of your will. But it is possible to keep your bank account out of the probate process by designating a “payable on death” (POD) beneficiary with your bank. POD accounts can be a relatively simple and inexpensive way to bypass probate and ensure your loved ones have prompt access to funds that may be necessary to pay critical expenses.

One thing that you need to understand is that a POD account is not the same thing as a joint bank account. A joint account is one where two or more people share ownership over the funds in the account. With a POD account, in contrast, the account owner names a beneficiary who only has the right to the funds upon the owner’s death. In other words, when you name a POD beneficiary for your bank account, that person has no right to access or use any of your those until after you die. During your lifetime, the beneficiary has no legal ownership interest in the account whatsoever.

Now, it is possible to have a joint account with a POD beneficiary. For instance, say a married couple has a joint bank account that names their daughter as the POD beneficiary. When the first spouse dies, sole ownership of the account passes to the surviving spouse, and only when the second spouse dies does ownership pass to the daughter.

How a POD Account Works

As noted above, you typically fill out a form with your bank to name a POD beneficiary for your account. This form is sometimes called a “Totten trust.” Florida law also contains sample language for these types of forms.

When the account owner passes away, the beneficiary or the personal representative of the owner’s estate will need to provide the bank with proof of death, such as a death certificate, before the funds are released to the beneficiary. The account does not pass through probate, however, so it is not necessary to open an estate beforehand.

It should also be noted that while a POD account is not considered part of the owner’s probate estate, it is still an asset of the owner. This means that a POD account may be subject to creditor claims after the owner’s death, particularly if the probate assets are insufficient to pay any outstanding debts and expenses.

Get Advice from a Florida Estate Planning Lawyer Today

A POD account is just one tool available for individuals looking to avoid traditional probate. There are other options that you may wish to consider depending on your finances and circumstances, such as a trust. A qualified Fort Myers estate planning attorney can sit down with you and review all of the available options.

Contact the Kuhn Law Firm, P.A., at 239-333-4529 today to schedule a consultation with a member of our estate planning team.

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