Tag: POD

Video

Good morning, folks. It’s Andy Stautz at Stautz Law, and we are back for another topic about probate and estate planning. Today’s topic is a fairly basic one, but it comes up in my planning efforts a lot, and I think it’s worth talking about. And that is what is the difference between a joint bank account and a payable on death bank account or transfer on death bank account?  

I think a lot of my clients kind of treat these as equivalent. And there are there are ways that they’re similar.  

Joint Bank Accounts

OK, so a joint bank account has your name on it, probably as the primary account holder, and then you’ve got a secondary account holder who can be an adult child, a sibling, a spouse, whatever. And it’s convenient because the joint account holder can use the account just as though [] the funds are theirs.  

So if you’re, paying bills or you’ve got an adult child who helps pay your bills for you out of that account, it can be really convenient. And then on death, a joint account passes to the other account holder. The other account holder becomes the sole account holder, and it’s just theirs.  

It avoids probate in that sense, and it’s automatic, and that’s great.  

POD Accounts Similarities and Differences

A transfer on death or payable on death bank account is similar in that it automatically goes to the designated beneficiary at your death, but it doesn’t give immediate rights to the bank account.  

So that’s kind of the big difference, right? It’s: does the beneficiary only get the bank account when you’ve passed or do they have immediate access to the funds in the account?  

How to Decide Between Joint Bank Account and POD

Now, there are great reasons to use both. And you know, the transfer on death, I should add, a transfer on death designation or payable on death designation also avoids probate, right? It’s also automatic.  

So from an estate planning perspective, you know, they’re both, they’re both going to be non-probate assets. That’s great.  

It’s just the behavioral question that you’re going to want to cover, right? Do you want your beneficiary to, you know, get the bank account on your passing or do you want them to have rights in it right now? If they have rights in it right now, you know, There’s a trust question, right? There’s an access and privacy question. So you need to think about, okay, do I really want, do I really want a joint account holder when a payable on death designation might do the same thing?  

And that’s going to be specific to you, right?  

This is an informational talk just to highlight the difference. And when you talk to me about your specific situation, estate planning, or probate as the case may be, we’ll figure out how the accounts are or should be titled and what’s going to work for you in your situation. So give me a call or e-mail or book here online. You’re on my website. I hope that’s been informational and I will see you next time. Thanks for watching. Bye.