Should I Get a Payable-On-Death Account When Estate Planning?

Estate planning involves making critical decisions to ensure your assets are managed and distributed according to your wishes after your death. One popular tool in estate planning is the Payable-On-Death (POD) account. This article explores whether you should consider a POD account in your estate planning, within the Georgian state law.

What is a Payable-On-Death (POD) Account?

A Payable-On-Death (POD) account is a bank account that allows you to designate a beneficiary to receive the funds upon your death, bypassing the probate process. This type of account provides a straightforward way to transfer assets directly to the named beneficiary.

Benefits of a POD Account

1. Avoiding Probate:
   • One of the primary benefits of a POD account is that it avoids probate. This means the account can transfer funds to the beneficiary without going through the court system, saving time and legal fees.
2. Simplicity and Convenience:
   • Setting up a POD account is relatively simple and can be done directly with your bank. It provides a hassle-free way to ensure you transfer your assets according to your wishes.
3. Control During Lifetime:
   • As the account holder, you retain full control over the funds in the POD account during your lifetime. You can withdraw, deposit, or change the beneficiary at any time.

Considerations Under Georgia State Law

1. Legal Framework:
   • In Georgia, state laws govern POD accounts and recognize and enforce the designation of beneficiaries. Understanding these laws is important to ensure you set up your POD account correctly.
2. Impact on Estate Taxes:
   • While POD accounts bypass probate, Georgian law still considers them part of your taxable estate. This means the value of the POD account will be included in the calculation of estate taxes.
3. Creditor Claims:
   • In the state of Georgia, assets in a POD account may still be subject to creditor claims. If you have outstanding debts at the time of your death, creditors may be able to access the funds in the POD account.

Comparing POD Accounts with Other Estate Planning Tools

1. POD Accounts vs. Wills:
   • While a will is a comprehensive estate planning tool that can address the distribution of all your assets, a POD account specifically designates funds to a beneficiary, bypassing probate. You can use both tools together for effective estate planning.
2. POD Accounts vs. Trusts:
   • Trusts offer more flexibility and control over the distribution of your assets, including the ability to set conditions for beneficiaries. However, trusts can be more complex and costly to establish compared to POD accounts.

Steps to Set Up a POD Account in Georgia

1. Choose a Beneficiary:
   • Decide who you want to designate as the beneficiary of your POD account. This can be an individual or multiple individuals.
2. Contact Your Bank:
   • Visit your bank and request to set up a POD designation on your account. You will need to provide the beneficiary’s information.
3. Complete Necessary Forms:
   • Fill out the required forms provided by your bank to establish the POD designation. Ensure all information is accurate and up-to-date.
4. Review and Update Regularly:
   • Periodically review your POD account to ensure the beneficiary designation still aligns with your estate planning goals. Update the beneficiary information as needed.

Potential Drawbacks of POD Accounts

1. Limited Scope:
   • POD accounts only address the distribution of specific financial accounts and do not cover other assets like real estate or personal property.
2. No Control After Death:
   • Once the account holder passes away, the beneficiary immediately receives the funds in the POD account without any conditions or oversight.

Conclusion

Deciding whether to include a Payable-On-Death (POD) account in your estate planning involves weighing the benefits and potential drawbacks. In Georgia, POD accounts offer a simple and effective way to transfer assets outside of probate. However, it’s important to consider the legal implications and how they fit into your overall estate plan.For tailored advice and assistance with estate planning, including setting up POD accounts, call us today. Our experienced attorneys help you navigate the complexities of Georgia state law and ensure you meet your estate planning goals.