When you pass away, you know that your adult children may need to have access to financial accounts fairly quickly. They may need to pay for emergency medical care, for instance, depending on the nature of your passing. They may also have to cover funeral costs and other such arrangements. It can make the whole process a lot less stressful if they have money on hand.
However, when your estate has to go through probate, it’s going to take some time for your assets to transfer to the next generation. They don’t just take ownership the next day. This can complicate the process for them and create unnecessary financial stress. Fortunately, there is one thing you can do to give them money more quickly.
A payable-on-death-account
What you may want to do is to use a payable-on-death account. This is a type of trust, and you name a beneficiary when you set it up. But that beneficiary designation is simply attached to your financial account – such as a bank account.
When you pass away, then, the POD account doesn’t have to go through probate. The beneficiary just becomes the new account owner. They can then almost immediately access these funds, which could be used to cover the aforementioned costs.
A POD account can also be helpful if you anticipate any estate disputes. These can lengthen the probate process, but they do not affect the POD account, which isn’t in your estate any longer.
This is just one financial consideration when making your estate plan. Be sure you carefully consider all of the legal tools at your disposal.
