How Do Payable-On-Death Accounts Work in Florida?

For many looking to establish an estate plan, the most important thing is taking care of your beneficiaries. As such, you may wonder what options are the easiest for your loved ones to navigate following your passing. One option is to establish a payable-on-death (POD) account. If you’re unsure how these work, the advantages and disadvantages of this option, or how to create one, you’ll want to keep reading. The following blog explores what you should know about these complicated matters, including the importance of working with Tampa estate planning lawyers to help you through this process.

What Is a Payable-On-Death Account?

A payable-on-death account, also commonly known as a Totten trust, allows you to name a beneficiary to automatically receive the assets held in the account immediately upon your passing. This allows you to control the account over the course of your life, like making deposits, withdrawals, or even closing the account if necessary, while ensuring that a loved one can assume control of the assets after your death.

For a beneficiary designation to access the funds left to them, they must simply provide their death certificate to the bank or institution where the account is held.

What Are the Benefits and Drawbacks of This Option?

One of the primary benefits of establishing a payable-on-death account is that it will avoid the probate process. When someone dies, typically the assets in their estate must undergo probate. This process involves the probate court validating the will and overseeing the distribution of assets. Unfortunately, probate can be a lengthy, tedious, and expensive process. As such, many establish trust funds or payable-on-death accounts to avoid their beneficiaries having to endure this process. As such, a payable-on-death account avoids probate because it automatically transfers ownership of the account to the beneficiary upon your passing.

One of the downsides to establishing a POD account occurs in the event you do not update your beneficiary designations. When your life changes, such as the birth of a child or a divorce, you need to update who the individual on your account is. Failure to do so means that your ex-spouse, for example, can receive the assets held in this account, even if your will states otherwise. This is because POD accounts override what is stated in a will.

How Do I Set One Up?

In order to ensure that your account is payable-on-death, you’ll need to contact your bank or the financial institution where the account is held and file a beneficiary designation form. You’ll need information about the beneficiary, like their full legal name, mailing address, and likely their Social Security number.

You should note that the beneficiary designation you establish will not apply to all accounts or transfer with your account if you move it to a new bank. As such, you’ll need to ensure that you establish a payable-on-death designation for each account you would like this to apply to.

Estate planning can be incredibly overwhelming, which is why it’s imperative to connect with an experienced attorney with Tampa Law Group to help guide you through these difficult times. Our firm will do everything in our power to assist you through these complex matters to help you achieve the peace of mind you need for the future. Contact us today to learn more.