When it comes to estate planning and distributing your assets, one option you may be interested in is a payable-on-death (POD) account. This means that you add a beneficiary to an existing financial account. If you pass away, the beneficiary becomes the account owner.
There are a few different benefits to using this structure, depending on your situation. Let’s look at a few examples below.
The transfer happens quickly
First of all, the probate process can sometimes take months to complete. But since a payable-on-death account has a beneficiary designation, it skips probate. This means that the beneficiary might get access to the funds far more quickly than they would otherwise.
It can be less expensive
Another advantage of skipping probate is that the costs associated with the probate process can reduce the value of an estate. This can dilute the inheritance that beneficiaries receive. That will not happen with a POD account, however, since it doesn’t have to go through probate to begin with.
It lowers the odds of a dispute
Finally, it is possible for beneficiaries to dispute an estate plan, but they cannot dispute the POD account beneficiary designation. This lowers the odds of a legal dispute between beneficiaries, even if they don’t necessarily agree with the transfer of funds. For many people, avoiding disputes is one of their main goals when drafting an estate plan.
Drafting your plan
These are just a few of the benefits of using this type of financial account. Carefully consider all of your options as you create an estate plan this year.
