What is a POD Account?

9 Jul

A POD account is a simple way to leave assets to your heirs without having to rely on a will or trust. The symbol “POD” stands for payable on death. With a POD account you name the beneficiary(s) when you open the account typically at a bank. In the event of your death, the beneficiary assumes ownership of the remaining resources directly while avoiding the time-consuming and often costly process of probate.

Although the above sounds appealing, unfortunately POD accounts do NOT provide for a comprehensive estate plan. What happens if the account holder is incapacitated and unable physically or mentally to make important decisions regarding his/her business affairs? In such instance a POD account would not solve the problem because  with a POD account the beneficiary only takes over at death, NOT upon incapacity.

Another consideration is that while you are alive, your bank account is fair game for a judgment creditor. There is no asset protection nor does making it a POD account make it so.

A POD account does not give you control over how and when the heir receives the asset. If for example the beneficiary at the time of your death is still a minor, chances are the beneficiary will not have the experience to manage the account.

There are many factors that need to be considered when choosing the right estate plan options for you. Avoiding the cost of probate is an important objective. The POD account may be feasible for bank accounts but won’t work for other assets such as real estate, stocks and bonds, mutual funds, rental property, etc. It is always best to sit down with an estate planning attorney to discuss your objectives and options before choosing a particular path.


Stephen J. Gross is an attorney with 30 years experience located in West Los Angeles . The office focuses on real estate law, wills, trusts, and other estate planning techniques, asset protection, corporate and LLC formation, and general business litigation cases. We offer a free 1/2 hour phone consultation to Pages LA readers. We can be reached at 310- 652 8090 and  via sjgassociates.com.

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