What Is A Payable On Death Bank Account?

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A payable on death (POD) bank account is also commonly referred to as a Totten trust account as it is one of the types of bank accounts in which you can name the beneficiary who is going to receive the money in the account upon the death of the account owner. Below is an elaboration of the concept and some of the aspects of POD bank accounts.

The following examines how POD bank accounts work:

For a POD bank account, you set up a standard current/chequing or savings bank account eligible for an individual or joint account holder and name one or multiple beneficiaries for the said account. The beneficiaries do not have any legal claims towards the money in the account or any say concerning the account until the death of the owner. Essentially the big difference with a POD account is what occurs when the person owning the account dies.

The money can be collected directly from the bank by the person you have nominated as the beneficiary after your demise without any regard to the account of the deceased person going through the probate process. The money is then delivered to the intended heir without going through the feelings of the other relatives. For this reason, a POD account facilitates this transfer outside the probate, and people refer to it as a ‘poor man’s will.’

Key Features and Benefits

Avoiding Probate

When it comes to the strengths of the POD bank account, first of all, it will enable the individual or the organization of your choice to access the money in the account without going through the probate process. Probate is often slow, and everyone can access the information, and it is not cheap. They are thus useful for ensuring that your beneficiaries get what you want them to have in a more efficient and hassle-free manner.


It is less time-consuming to open and manage the POD account compared to establishing the formal bequest of will and trust. The accounts are opened when opening a bank account with a simple form called POD form. You just provide a list of beneficiaries on an account form without being asked additional questions. That is better than creating a full estate plan that may take a lot of effort and time.

Control in Life

The advantage of a POD account is that you are the one in control of the money and you can freely use it as long as you are still alive unlike in an irrevocable trust. You have full discretion over the deposits and withdrawals that you can make or can even close the account if you wish.

Flexibility of Beneficiaries

In a POD account, you can have more than one beneficiary and accompany it by a percentage that will split the bequest between them. You can also change the beneficiaries at any one time as you deem appropriate by completing new beneficiary forms with your bank.

Limitations to Know

No Legal Substitute
Despite these advantages, a POD account should not be used as an alternative to proper estate planning, which would involve a will, and possibly, a living trust. It enables you to nominate those who would receive all your property after your demise and guardians for your children.

Limited Protection
POD money is still considered part of your estates, and thus you still pay taxes on them. It does not have the creditor and estate tax protective features that come with a trust. Furthermore, POD accounts do not enable the applicant to stipulate conditions regarding the distribution.

Account Type Rules
POD designations are not allowed on all types of accounts; most banks permit account holders to make such declarations only on personal checking and savings accounts. Other account types such as IRA, or certificate of deposit may not be accepted as a form of guarantee. Please ensure that you consult with your relevant bank for the specific policies regarding such acts.

In light of what has been said about payable-on-death bank accounts, one is in a position to decide whether it would be financially beneficial to open one for incorporation in their financial and estate planning process. That said, a POD account has the advantage of providing an easy means by which some of your assets can be delivered directly to the intended beneficiaries.

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