1. What is POD?
POD means Payable on Death. This is a term used on accounts in banks which refers to those which automatically go to the beneficiaries stated on the account once the original account holder dies. This is an agreement between a client and the bank to transfer all of his assets to the name of the beneficiaries.
2. What are the benefits of a Payable on Death account?
One of the benefits of a POD account is that you are doing away with the probate court when a client passes away. All it takes for the money on the account to be transferred is the name of the beneficiary to be indicated on the agreement. With the name placed on the certificate, your beneficiary will have a hassle-free transfer of money to their names.
3. How do you convert an ordinary account to a payable on death account?
It is easy to transfer an account to a payable on death account. It is a free service offered by banks or credit unions. All you need to do is fill out the forms from these institutions. You then have to put the name of the beneficiaries of your account on the space provided. The form given by the banks is called the Totten trust. Once all the forms are filled out, the client has already given the go-ahead signal to the bank to convert the account to a payable on death account.
4. Can the beneficiary use the money from the account?
The beneficiary can use the money on his Amsterdam holiday or Amsterdam city trip only when the account is transferred to his name. This will only happen when the account holder passes away. If the account holder is still alive, only he is allowed to spend the money.
5. What happens on the POD account if he lives in a community property state?
If he is married and is living in a community property state, his spouse has a claim on half of the money contained in the account. But the ones that were acquired before marriage remain the property of the account holder.
6. What happens if the account is named after two people?
The beneficiary has to wait until the last account holder dies before he can get access to the account.