What are the Disadvantages of Payable on Death account?
The payable on death account is one of the greatest choices that you will ever make for your loved ones. Instead of undergoing probate courts, your beneficiary can easily get the money that you saved for them in no time. The real reason why people opt for payable on death accounts is so that you can still take care of your family even after you are long gone. You want them to be on their way on their next Amsterdam city trip or have enough money to go to the Amsterdam zoo or Van Gogh Museum in Amsterdam.
But just like any service available, payable on death accounts also have their disadvantages. Here are some of them:
Banks may fail in the future
If you are putting all your hopes on the bank of your choice, you are not alone. A lot of clients of banks have their full trust in their favored banks. This is because they are the financial institutions that take good care of their hard-earned money. But the danger with banks is that they can fail in the future. What does this mean? It means that banks can file for bankruptcy at any time in the future. Although the clients are still the priority upon the closing of their accounts, your beneficiary may wait a long time to get the assets that you have in the bank. So, the main reason why you chose a payable on death account will also be the same reason why they will have a longer time before they receive your money.
Your beneficiary may incur fees
If you think that you will avoid fees when you choose to have a payable on death account, you are incorrect. First, the bank has taxes in the services that they provide. So, you might not be noticing this but the money that you deposit on the bank is incurring taxes. Although payable on death accounts are generally free, some of the banks available may ask you for some service fees. So, if your reason for getting payable on death accounts is to avoid fees, then you have to reconsider your choice.