Transfer On Death And Payable On Death: What Is The Difference?
Estate planning is important for many reasons. One of the most consequential of these is often so people can help their loved ones avoid the probate process. Probate is a process supervised by the court and it can be long and arduous. The fact that probate takes so long may mean that your loved ones will not receive their inheritance for many months, or even years, to come. Probate also has the potential to become very expensive and the cost is paid by the estate. This can also reduce your loved ones’ overall inheritance.
To ensure the transfer of assets is more efficient, many people choose to retitle assets, shielding them from the probate process. Two common ways to do this are using payable on death and transfer on death accounts. There are differences between these two tools and they are not always understood. Our Daytona Beach estate planning lawyer explains what they are below.
Payable on Death Designations
Payable on death (POD) designations can be placed on certain accounts. A POD will automatically transfer the property in an account to the designated beneficiary if the original account holder passes away. POD accounts do not have to go through the probate process, allowing beneficiaries to receive the property sooner. POD designations are often used on checking, savings, and money-market accounts.
POD designations have many benefits. The original owner of the account still has full access to the funds and it is not until they pass away that a beneficiary has any control over it at all. It is also possible to name multiple beneficiaries and include additional beneficiaries or remove beneficiaries in the future.
POD designations are very affordable and setting one up is fairly straightforward. Generally speaking, all that is required is for you to fill out a form provided by the financial institution that holds the account.
Transfer on Death Accounts
Transfer on death (TOD) accounts are like POD designations. TOD accounts will also mean an asset automatically passes to a beneficiary in case the original owner passes away. The difference between a POD and a TOD is that the latter are typically used for transferring bonds, stocks, and similar investment accounts. Owners will also continue to own the account during their lifetime, and they can gift or sell the investment. Beneficiaries do not have any right to the account until the original owner passes away and more heirs can be added at any time.
TODs also do not have to go through the probate process, but they can be more complex to set up. It is important to speak to an attorney if you want to include a TOD as part of your estate plan.
Our Estate Planning Lawyer in Daytona Beach Can Answer Your Questions
When creating your estate plan, you will have many questions. At Bundza & Rodriguez, our Daytona Beach estate planning lawyer can answer them and ensure you have a thorough and comprehensive plan that will protect you and your family. Call us now at 386-252-5170 or contact us online to request a consultation and to get the legal help you need.
Soucre:
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0731/0731.html
