The typical process, when someone passes away, is for their assets to go through probate. This is the legal process of examining their estate plan and distributing the assets in accordance with that plan. The estate executor is typically in charge of inventorying assets, processing paperwork, paying off remaining debts, and ensuring that the correct beneficiaries get their inheritance.
But a payable-on-death (POD) account can be a bit different. When a person passes away, they have already named a beneficiary for the POD account. This person gains control once they have provided the appropriate paperwork to the bank, such as the death certificate. As a result, that account skips probate.
What are the advantages to doing this?
One of the main advantages of using a POD account is that the transfer can happen relatively quickly. With a complex estate, probate could take months. A POD account could be accessed in just a few days. This can give beneficiaries money they need at a crucial time.
Another advantage is that no one can challenge the beneficiary designation in the same way that they can challenge an estate plan. Even if someone challenges a will and says that it is fraudulent or the product of undue influence, the POD designation still allows access to that account. The estate challenge could add a significant additional amount of time to the distribution of other assets, but the POD account moves much faster.
Probate can be complex, and it is important to understand exactly what types of assets will be affected. An experienced attorney can assist and answer any questions you may have.