One way to avoid probate is to use payable-on-death (POD) accounts. These accounts give you a way to keep a huge chunk of your money out of the probate process.
If you have money in your bank account, inform the bank of whom you wish to leave the money to, and then create the form that lets you implement this. With the duly filled form, the bank can go ahead and do the rest.
However, this process is set in motion the moment you die – when you still alive, your beneficiary doesn’t have any rights whatsoever of accessing the money in the bank.
The bank, however, permits you to edit the info on the form as you feel like. The bank understands that you can experience a change of heart, which means you can change the amount or add a different beneficiary.
The Benefits of POD Accounts
These accounts are easy to come up with. All you need is to pass by your bank and fill out the form, sign it and submit. The bank doesn’t limit you on how much money you can leave for the beneficiary.
The procedure of designating a beneficiary for a POD won’t cost you a dime. Additionally, the retrieval process of the money is easy – after the owner dies, the beneficiary can go for the money.
The Process of Setting up a POP Account
Many financial institutions offer his service. They won’t charge you any extra fees to store the money. The good thing is you can choose the best account for the money to be kept – savings or checking.
All you need is to open an account, fill the details and then list the beneficiary of the money on the card. Depending upon the bank, you might be forced to give more info for example the details of the beneficiary, including their names, contacts, address and date of birth.
The beneficiary won’t have to sign anything during the process, which makes it convenient even when the beneficiary is not around, for instance, when your beneficiary is in another state.
Choosing the Beneficiary
Different states have their own rules regarding the person that you can name as a beneficiary. This means you don’t just wake up one day and name your friend as a beneficiary of your POD. This is why it is important that you work with an estate planning lawyer to guide you on setting up this account.
It is ok to name your kids, even minors as a beneficiary for your POD. However, several issues come up when doing this.
First, the amount in your account will determine whether to have a guardian or not. Some states allow you’re the minor to access the funds on their own if the amount is a few thousand dollars.
If you are setting up an account with more than $5,000, you ought to arrange to have an adult manage the money on behalf of the kid.
The good thing is you can avoid involvement of the court at any time by choosing someone beforehand, and giving them the authority to handle the money on behalf of the kid when you die. This person is called a custodian, and is recognized by the law in numerous states.
The role of the custodian is to manage he money on behalf of the kid. When the kid attains the age of 18, the custodian turns over what is remaining to him.
You can decide to name more than one person as the beneficiary of the POD. This is allowed, and the law assumes that each beneficiary will inherit an equal share of the money unless you go ahead and put it down in writing that the shares be different.
To avoid family feuds, some states don’t allow you to change the equal-share rule. To understand this, then talk to your estate planning attorney to give you some closure.
If one of the beneficiaries passes on before you do, then the remaining beneficiaries will share the estate.
Another viable way to avoid probate and the resulting fees is to come up with a POD for your beneficiaries. This works simply – when you die, the amount in your bank is given to the beneficiaries you have listed with the bank.
Our estate planning lawyers have the experience to help you make the right choice on which institution to choose. Call us today to arrange a meeting or request a callback.