Payable on death (POD) bank accounts may come in handy. A POD beneficiary (and the beneficiary’s creditors) has no access to the account until the death of the account owner. If you’re the owner, you can change the beneficiary without notice or spend the account’s assets without permission from the beneficiary.
POD accounts usually are available for bank savings and checking accounts, savings and loan accounts, credit union accounts, CDs, Treasury securities and savings bonds. You also may be able to name beneficiaries for a brokerage account holding securities with a transfer-on-death (TOD) account, depending on state law. With either a POD or a TOD account, assets pass to beneficiaries with a minimum of paperwork.
Be careful, though, never to use a POD or TOD designation as an alternative to genuine estate planning. You should be sure to coordinate these accounts with your estate plan. As an example of what might go wrong, if your will says everything in your estate goes to your children but your POD account names your cousin as beneficiary, the POD account goes to your cousin.