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Pros and Cons of Payable on Death Accounts
Beyond wills and trusts, other methods can be used to craft the best estate plan for your needs. Payable-on-death accounts (PODs) are one such method. They can be an easy and cost-efficient way to avoid probate, but they are not without risks. Essentially, with a POD you designate one or more beneficiaries to inherit your account upon your death. An experienced Fort Worth, TX estate planning attorney can help you decide whether a payable-on-death account is right for your estate planning needs.
What Is a Payable on Death Account?
A payable-on-death account is an estate planning instrument. When you open a POD, you name one or more beneficiaries to take over the account when you pass away. You control the assets in the account during your life and can change the beneficiaries or remove them altogether at any point.
What Are the Benefits of a Payable on Death Account?
Payable-on-death accounts provide many benefits, chief among them their simplicity. Creating a POD is as simple as setting up a bank account. PODs are also inexpensive to set up and maintain. Another big advantage is that they avoid probate, the administrative process to prove a will, which is a significant benefit because probate can be expensive, time-consuming, and tie up money away from beneficiaries.
What Are the Disadvantages of a Payable on Death Account?
With the POD’s simplicity come some considerable disadvantages. Beneficiaries may only access a POD account when the account owner dies. If the account owner is incapacitated this could complicate things unless there is a guardianship in place. This could be very unfortunate if the beneficiary is a family member who needs the funds to live or care for the incapacitated person after the account owner’s death. Also, PODs can be easily reached by creditors, so if the beneficiary has creditors, funds in the POD would be available to them upon the account owner’s death.
Additionally, POD designations take precedence over other elements of the estate plan, which can lead to unintended results. Still, even considering these disadvantages, it is possible to incorporate PODs into an estate plan. An experienced attorney can coordinate the POD with the rest of the estate plan to ensure there are no discrepancies.
Call a Fort Worth, TX Estate Planning Lawyer
When planning your estate, there are many ways that it can be structured to protect your family’s future, from trusts to wills, to other instruments like the payable-on-death account. At Gonzalez Law, PLLC, our experienced Fort Worth, TX estate planning attorney can help you decide the best way to plan for the future while addressing your particular needs. Call the office for a complimentary consultation at 817-349-7330.
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