Some financial accounts can be converted into payable-on-death accounts or POD accounts. Typically, you just have to fill out paperwork and name a beneficiary to officially set up the account as a POD account. As we have recently discussed, this is one way to help assets skip probate.
But why is it beneficial to skip probate, and why would you want to use a POD account to do so? Here are two reasons to keep in mind.
1. It speeds up the process
First and foremost, probate can take months to complete. The estate executor must gather paperwork, inventory assets, distribute copies of the will, pay off debts and finally distribute assets to beneficiaries. This doesn’t happen overnight, so beneficiaries may not have immediate access to funds that could be helpful.
In contrast, with a POD account, the transfer is much faster because the beneficiary simply takes control of the account once it’s confirmed that the original account holder has passed away. This could give them access to the money in just a few days.
2. It makes disputes less likely
Another advantage is that a POD account may help beneficiaries avoid disputes over asset distribution in the estate plan. Such disputes can slow down probate and make it more contentious.
Since a POD account doesn’t go through probate, there’s no way for anyone to challenge the beneficiary designation. As such, this type of account makes it far less likely that siblings or other family members will become embroiled in a prolonged financial dispute.
If you are interested in using a POD account or other estate planning tools, take the time to carefully consider your legal options.