Thinking about what happens after we die might sound a bit morbid, but if we don’t do this it could mean that we create a lot of problems for those we love. Payable on death (POD) accounts are a good option to ensure that family can quickly access money if the worst happens to you. This type of service is free, and it just means that family members won’t have to deal with a lot of problems in order to get their hands on some cash for funeral expenses.
The Need for POD Accounts
Sometimes there can be a long time period before family members can get access to money in the deceased person’s account. This can be a real problem because when somebody dies there are usually a lot of expenses. The money has to come from somewhere and this all puts added stress on those who are left behind. The nice thing about POD accounts is that getting access to the available funds is a lot easier. So long as there is enough in the account there will be money available to pay any immediate costs.
How POD Accounts Work
Payable on death accounts are also sometimes referred to as Totten trusts. They are set up by a bank account holder who chooses an individual to be their beneficiary. In most banks setting up this type of account will be fairly straightforward. It just involves deciding on which of your accounts will be eligible for the Payable on Death account. The whole process usually involves filling out a form and that’s all that is required. If you die then this means that the beneficiary will have automatic access to the accounts that are tied to the Payable on death account.
The Difference between POD Accounts and Joint Accounts
A joint account is one where two people will be able to access the accounts at any time. With the payable on death account the other party will not be allowed to withdraw from the account so long as account holder is still alive. Most joint accounts are held by couples, but there are some couples who prefer to have separate accounts. Using the payable on death accounts means that partners can have separate accounts, but still be able to quickly get hold of the cash in each other’s accounts should the holder pass away.
Problems with POD Accounts
Although the whole point of payable upon death accounts is to allow family member easy access to cash there can be problems. In some situations the family won’t be able to get the money quickly because of legal holdups. The most usual reason for such a delay will be tax issues; in particular estate tax. In some parts of the US it will be necessary to pay estate tax before the money can be touched.
While there may occasionally be a hold up with payments from a POD account it is generally a good idea to have one. It will certainly be easier for family to gain access to the money then with a regular account.