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  • Writer's pictureLauren A. Merritt, P.A.

This Free and Easy Step Will Save Your Family Time and Money.

Did you know that money in a bank account passes to a Payable-On-Death beneficiary outside of probate and free from creditor’s claims?

1) Adding a Payable-On-Death beneficiary to your bank accounts is free and easy!

There is no cost and no lawyer required to designate a Payable-on- Death (“POD”) beneficiary for your bank accounts. Simply contact your bank and request the appropriate form to add POD beneficiaries to each of your accounts. Make sure you fill out a form for each account, if necessary!

2) A Last Will and Testament does NOT avoid probate for money in a bank account.

A Last Will and Testament that designates a beneficiary for a bank account does not avoid probate.

REPEAT: You cannot avoid probate by designating a beneficiary for your bank accounts in your will.

Think of a Last Will and Testament as instructions to the court for how you want your assets to be distributed. Through the probate process, the court oversees distribution of your assets to make sure those instructions are followed. Unless all of your assets pass outside of probate (such as a bank account with a POD!), then your family will be stuck with the time and expense of the court interpreting the instructions in your will.

3) Adding a Payable-On-Death beneficiary means the money transfers without opening a probate estate.

Under Florida law, money in a bank account passes to a POD beneficiary outside of probate. That means the money can pass to the intended beneficiary without court fees, court approval, or a court order. The POD beneficiary simply needs to bring a certified copy of the death certificate (without cause of death) to his or her local banking branch and ask whether there is a Beneficiary Claim Form to complete.

4) Money passes to a Payable-on-Death beneficiary quickly.

In most cases, money in a bank account passes to the POD beneficiary soon after the beneficiary obtains a certified copy of the death certificate and presents it to the appropriate bank. There are big benefits to the quick transfer:

a) The money can be used for administrative expenses and legal fees if there is other property in your estate that requires opening a probate estate with the court. This prevents your family from having to come out of pocket to administer your estate.

b) If there is homestead property in your estate, the money can be used to keep the mortgage current and pay utilities until title to the house passes to the new owner; and

c) The money can be used to pay for your burial expenses so that your family does not have to come out of pocket.

Conversely, money held in a bank account that must pass through probate may not pass to the intended beneficiary for months or even for more than a year, depending on the complexity of the estate.

5) Money that passes to a Payable-on-Death beneficiary escapes most creditors’ claims.

Only non-exempt probate assets are subject to payment of creditors’ claims. Money that passes to a POD beneficiary is not part of the probate estate and, thus, is not subject to payment of most creditors’ claims. That means, generally, 100% of the money in the bank account will pass to the POD beneficiary.

On the other hand, if there is no POD beneficiary listed on a bank account, the money in the account becomes part of the probate estate. If your estate has creditors, the bank account money may be diminished or even consumed entirely by your estate’s creditors before your beneficiaries can inherit it.

6) Money passes to a joint account holder outside of probate.

Listing a joint account holder on your bank accounts has a similar effect as listing a POD beneficiary. By presenting a copy of your death certificate to the bank, the joint account holder would become the sole account holder entitled to all of the money in the account. The transfer takes place without court involvement, and the money would not be subject to probate or creditors.

Joint accounts are common for spouses with shared income and expenses. If you list someone as a joint account holder, be mindful that a joint account holder has access to the money in your account during your lifetime, as well as after your death.

Have questions about Payable-on-Death Beneficiaries?

Schedule your consultation today: (850) 741-2999.

Lauren A. Merritt, P.A.

111 S. De Villiers Street, Ste. B

Pensacola, FL 32502

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