Payable On Death Accounts Can Be Two Edged Sword

MB900178942[1]Sometimes it’s the simple thingsin life that you have to watch out for. Things that appear simple can actually be very complex. So it is with “payableon death” accounts, or PODs.

Forbes recently featured this subject in an article titled “When Payable On Death Accounts Backfire.”

The promise of a “payable ondeath” account cannot be undersold. Funds subject to such an arrangement escapeprobate and transfer straight to the named beneficiaries. No muss, no fuss.

On the other hand, whenever anasset passes “outside” of your estate by avoiding probate, it may not be insync with your overall estate plan. This is true when you really intend for allof your heirs to share in your estate equally. If you have any accounts“payable on death” to just one of your heirs, then he or she will receive moreof your estate than intended.

Perhaps you want a particularaccount “payable” to the heir who also will be your executor. Your thinking isthat such a move will enable them to have ready cash for funeral and otherfinal expenses when needed. To avoid misunderstandings and hard feelings, makeyour intentions clear in your estate planning legal documents. For example, youcould provide that any proceeds left after your funeral and final expenses willbecome part of the inheritance for that heir with an adjustment made toequalize the shares of the other heirs under your estate plan.

In short, “payable on death” accounts and other directmethods to designate beneficiaries outside of your estate planning documentscan be incredibly useful when used correctly. Unfortunately, it can also bedownright counterproductive if they are not properly taken into account.

At IdahoEstate Planning we are the expertsyou need to know and trust. Work with us and we'll put together a plan thatworks for you and your loved ones. Remember, goodplanning is no accident.

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