Question: Is there any advantage to setting up a payable on death (or “POD”) account as part of my estate plan? Answer: The advantage of a payable on death account or transfer on death account is that the funds in the account pass directly to the named beneficiary without having to pass through the account holder’s estate. The account owner remains in control (and remains the owner) until he dies. For these accounts, avoidance of probate is the big advantage here. Now the other wise. As an estate planning technique, a POD account is an inflexible device. For example, a POD account does not permit a ‘per stirpital’ distribution so that if one of the beneficiaries named on the account predeceases the account holder, the heirs of the predeceased beneficiary will not inherit their parents’ share (as would normally be the case in a Will or Revocable Trust disposition). Moreover, an estate where all or a significant portion of the assets pass by POD designation may have insufficient cash to pay the estate’s administrative costs and taxes. While, there are ways to recover funds from an estate that were already paid to the POD beneficiaries, it is not always easy. Comment: It is not unusual for people to forget that they have POD beneficiaries named on a bank or other type of investment account. If a Will is executed and there is a POD beneficiary named, the POD designation will trump the terms of the Will. If clients have POD accounts, please let your estate attorney know! Steven E. Shane Principal Offit│Kurman Attorneys At Law 301.575.0313 Washington 443.738.1513 Baltimore 410.218.9339 Mobile 301.575.0335 Facsimile Please note the above material discussed is intended to provide only general information. Do not, under any circumstances, solely rely on this information as legal advice. Legal matters are often complicated. For assistance with your specific legal problem or inquiry please contact me directly.