The decisions one makes in his or her estate planning process are with the intention of caring for loved ones and providing for beneficiaries in the future. There are various estate planning tools one can employ to accomplish this goal, including establishing certain types of accounts. A payable on death account is an option that will provide you with control over your wealth and assurance that your assets will go to the designated parties upon your death.
There are potential benefits and drawbacks to these types of accounts. Before you make any important decisions for your estate plan, you will benefit from carefully evaluating your goals to determine if this is the right choice for your Nevada estate. One of the most important benefits of this type of account is that assets are transferrable without having to go through probate.
How does it work?
Payable on death means that there is an arrangement between the bank or credit union with the client to transfer account assets to designated beneficiaries immediately upon the account holder’s death. This is also a Totten trust. As you consider the best way to ensure that your assets end up in the right place, the following facts about these accounts may be beneficial:
- These types of accounts may be simpler to establish and maintain than traditional wills and trusts.
- Assets passed through a POD account do not have to go through probate, and it is possible to convert an existing account to a POD.
- The beneficiary of the account does not have a claim to any of the assets held in the account until the account holder passes away.
- POD assets may be marital assets, which means a spouse could have a rightful claim to some or all of the account in the event of a divorce.
One of the potential drawbacks to these types of accounts is that it is not possible to name alternate beneficiaries to the account. If the beneficiary dies before the account holder, contents of the account will move to the estate or the will.
Why you may need assistance
These types of accounts are beneficial for specific estate planning situations. However, there are other options that will also allow you to pass assets to your heirs and beneficiaries effectively. Whether you are considering this for your own estate plan or you are the beneficiary of this type of account, it may be helpful for you to seek guidance regarding the protection of your interests.