If you’re looking to leave money to one of your heirs, the most traditional way to do it is simply to put that money in your will. You name your heir and you state how much of your assets you would like to leave them. Your will and estate plan then goes through the probate process, where these assets are actually distributed, and the money is given to your heir.
But another option is to put the money into a payable on death (POD) account, which allows you to name a beneficiary at that point. You can pick your heir, or you can pick a different beneficiary, such as a trust. But what happens when you pass away? Does it still go through probate or will it skip that process?
The transfer is immediate
It actually skips probate because the transfer happens right away. Under the terms of the POD account, the beneficiary that you named is set up to take over that account upon your passing. It becomes their own property, so it never has to go through probate and it is never part of your estate after your passing.
There can be some advantages to doing this. It is faster, for instance. It avoids the potential for an estate dispute if someone is to challenge the will. Additionally, it can help to avoid disputes because other beneficiaries don’t even have to know that the account exists or that it changed hands. You could keep that information simply between you and the beneficiary, if you would like.
If you do decide to use one of these accounts, make sure you know what legal steps to take to set it up.