What is a Payable-on-Death Beneficiary?

One aspect of estate planning for many residents of Gwinnett County, Georgia, is naming beneficiaries and contingent beneficiaries on various types of policies or accounts. One way to name a beneficiary for bank accounts is known as a payable-on-death (POD) beneficiary designation. This is a specific type of beneficiary designation and it is important to consider it for specific types of bank accounts you hold. By designating a POD beneficiary, the assets in your accounts will not need to go through probate, and your beneficiary can receive them quickly. Our Gwinnett County estate planning attorney can explain in more detail.

Understanding the POD Beneficiary Designation 

What is a POD beneficiary designation? This is a particular kind of beneficiary designation for specific types of bank accounts. It allows a bank account owner to designate a beneficiary to whom the contents of the account will transfer upon the owner’s death. Prior to the owner’s death, the beneficiary has no claim to the account in any way.

You can name one or multiple POD beneficiaries. If more than one beneficiary is named, then what typically happens is that the beneficiaries will each receive an equal share of the account at the time of the owner’s death (e.g., if there are two named beneficiaries, each would receive 50 percent of the account contents, and if there are four named beneficiaries, each would receive 25 percent of the account contents). You can also discuss the possibility of naming an alternate or contingent POD beneficiary. There is no need to name a joint account holder (such as your spouse) as a POD beneficiary since that person already co-owns the account — they will become the sole owner if you pass away.

Only Certain Accounts Can Have Payable-on-Death Beneficiaries 

It is important to know that only certain types of accounts can have POD beneficiaries, according to Bank of America. The types of accounts that are eligible include:

• Checking accounts;
• Savings accounts;
• Certificates of deposit (CDs);
• Investment accounts; and
• Individual retirement accounts (IRAs).

Regardless of whether you own such accounts individually or jointly with a spouse, for example, you can identify a POD beneficiary. Sole proprietors who have small business accounts can also name POD beneficiaries since sole proprietorships are not distinct entities from the owner. However, any other type of small business bank account cannot have a POD beneficiary.

Contact Our Norcross Estate Planning Lawyers to Get Started on Your Estate Plan 

If you have one or more bank accounts in Georgia, considering one or more payable-on-death beneficiary designations should become part of your estate planning process. As we have discussed above, by designating a beneficiary, you can ensure that person receives the contents of your account without having to go through probate. One of the Norcross estate planning attorneys at Bowman Law Firm can speak with you today about designating a payable-on-death beneficiary, as well as many other aspects of estate planning in Gwinnett County. Contact us today for assistance with POD beneficiary designations and all of your estate planning needs.

Sources:

bankofamerica.com/deposits/beneficiaries-faqs/

law.justia.com/codes/georgia/title-33/chapter-15/article-4/section-33-15-61/