Introduction to Pay-on-Death Accounts

Payable-on-death accounts are a type of bank account that, at the owner’s death, passes the money remaining in the account directly to the beneficiaries named by the account owner. They offer an easy way to keep money out of probate. Notify your bank that you would like to add a pay-on-death beneficiary to your account and fill out the necessary paperwork. Checking, savings, money market, certificate of deposit accounts and even U.S. savings bonds can become a POD account.

A payable-on-death account sometimes goes by different names. Some call it a Totten trust. Some call it a tentative trust or revocable bank account trust. It may also be referred to as an ITF account, which stands for “in trust for.”

Beneficiary’s Rights to Pay on Death Accounts

As long as you’re living, your beneficiary has no rights to your money. You can continue to spend your funds just as you always have. You can also name a different beneficiary or simply close the account at any time. At your death, the POD account will pass to the beneficiaries named. This is true even if you have a last will and testament or a revocable living trust — the beneficiary designation on the account controls.

Advantages of POD Accounts

Some positive aspects of POD accounts are that:

  • They’re easy to create.
  • There’s no limit on how much money you can leave.
  • Designating a beneficiary costs nothing.
  • It’s easy for the beneficiary to claim the money after you’re gone.

Drawbacks of POD Accounts

However, POD accounts have drawbacks as well. For example, you are usually not able to name an alternate beneficiary to a POD account in case the first beneficiary dies before you. POD accounts also offer no legal protection for the funds–if a beneficiary is going through a bankruptcy or divorce at the time the cash is paid out, those funds become subject to the claims of creditors and ex-spouses. Finally, those with multiple POD accounts can lose track of the beneficiary designations and inadvertently create conflict when some family members inherit and others do not.

Just because a POD account avoids probate does not mean you are absolved of any and all legal obligations. Creditors and the government can make claims against your POD accounts if you die with unpaid debts and taxes and there is not enough money in your probate account to cover the expenses. Moreover, if you don’t leave enough assets to support your spouse or minor children temporarily, the account or any asset that passes outside probate may be subject to the claims of your family.


After your death, the beneficiary claims the money in your POD account by showing the bank a certified copy of your death certificate and proof of his or her identity. The bank’s records will make it clear that the beneficiary is entitled to the money in the account. There is no need for anything from a probate court.

Is a POD right for you? Or would a trust or a will be a better way to manage your estate plan? Contact the attorneys at Rochford Langins Jarstad and let us help you figure out the right tools for your situation.