Estate Planning with POD and TOD Accounts
A comprehensive estate planning process can accomplish several different goals. You can safeguard your family’s future, ensure you have enough assets to retire comfortably, plan for incapacity, and arrange it so your estate does not have to pass through probate. Just as no two people are alike, every estate is different and made up of a variety of legal documents.
Whether you want to avoid taxes, make your estate more liquid, or avoid probate, payable on death (POD) and transfer on death (TOD) accounts can help you achieve your goals.
Payable on Death Accounts
In most cases, POD accounts are used to transfer money, such as funds in a bank account. When you designate a financial account as POD, you direct the funds to be paid directly to a named beneficiary when you pass away. Including a POD designation in the estate planning process allows your named beneficiary to bypass the probate process and receive the funds directly.
Transfer on Death Accounts
Much like a POD account, a TOD designation allows you to give assets directly to a named beneficiary. The distinction is that TOD accounts are typically used for things like securities and real estate.
In 1989, Missouri became the first state in the country to allow transfer on death deeds for real estate. Without a transfer on death deed, a decedent’s home must be transferred through probate. Including a transfer on death deed in the estate planning process allows the decedent to give the property directly to a named beneficiary (or beneficiaries) before his or her death.
With both POD accounts and TOD accounts, the beneficiary has absolutely no right to the asset until the asset owner dies. This is an attractive estate planning feature for many older adults, who don’t want to compromise their independence by adding an adult child to their financial accounts or their home’s title. If you create a POD or TOD account, you can change beneficiaries or close the account at any time.
Springfield, Missouri Estate Planning Law Firm
At the Law Offices of Randy L. Smith, LLC, we help people create estate planning documents that provide peace of mind. Call today at (417) 841-2775 to speak to an experienced estate planning lawyer about your case.
This website has been prepared by The Law Office of Randy L. Smith, LLC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.