The Wisdom of Establishing Payable-on-Death Accounts

Payable-on-death accounts (POD) — sometimes referred to as transfer-on-death accounts (TOD) — are a type of account that, at the owner’s death, allows the money remaining to pass directly to the beneficiaries named by the account owner. They offer an easy way to keep money out of probate.

Establishing payable-on-death accounts is easy. Just properly notify your bank how you want to leave the money in the account once you pass— checking, savings, money market or certificate of deposit accounts can all have beneficiaries named on them. Even U.S. savings bonds can become a POD account. The bank and the beneficiary you name will do the rest. This simple process can allow you to bypass probate on accounts held solely in your name.

As long as you are living, your beneficiary has no rights to your money. If you need money or change your mind about the beneficiary, you can spend your money as you like; you can name a different beneficiary, or simply close the account. At your death, the POD account will pass to the beneficiaries named even if you have a Last Will and Testament or a Revocable Living Trust — regardless of what the will or trust says.

The one downside to POD or TOD accounts is that you cannot name an alternate beneficiary.   With that said, the pros to these accounts are:

  • They are easy to create.
  • There is no limit on how much money you can leave.
  • It costs you nothing to designate a beneficiary..
  • It is easy for the beneficiary to claim the money after you are gone.

Avoiding probate does not mean you can slip by creditors — you cannot use the account to avoid your legal obligations. If you do not leave enough assets to pay your debts and taxes or to support your spouse or minor children temporarily, the account or any asset that passes outside probate may be subject to the claims of creditors or your family.

If you live in a community property state and the payable-on-death account is community property, you may need to get your spouse’s consent before naming someone other than your spouse as the beneficiary.  Otherwise, your spouse can assert a claim after your death to half the money.

In non-community property states, like Connecticut, a surviving spouse who is unhappy with what she or he is inheriting may be able to claim part of the money you left to someone else. It is rare, though, that spouses go to court to claim these assets.

After your passing, the beneficiary claims the money by showing the bank a certified copy of the death certificate and proof of his or her identity. The bank’s records will make it clear that the beneficiary is entitled to the money in the account. There is no need for anything from a probate court. State law will dictate how long you will have to wait before the funds are released.

Is a POD account right for you? Is a trust a better way to manage your estate plan? Schedule an estate planning review with your attorney at Ericson, Scalise & Mangan, PC to explore what is best for your personal situation.

Do you have questions?

Count on your experienced team at Ericson, Scalise & Mangan, PC to provide you with sound guidance for your Estate Planning, Elder Law, Real Estate, Probate, Trust & Estate Administration, and other legal needs. For assistance, contact us today at (860) 229-0369, or email us at

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