Payable on Death (POD/TOD) for short term accounts

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bacon4retirement
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Joined: Sun Apr 19, 2020 9:59 pm

Payable on Death (POD/TOD) for short term accounts

Post by bacon4retirement »

For short term accounts like CD's, is it worth designating Payable on Death (POD/TOD) beneficiariaries? Several providers including ICMA and USAA required I mail in paper forms to set this up. Although other institutions make available to do online, it is still a pain to figure out each website. DW and I are in our 30's and live in WA. Any idea why it is not routinely included as an optional part of the application process for most kinds of personal accounts?

Since setting this up for our accounts, it also feels a bit morbid that every bank statement now mentions death :-(
123
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Re: Payable on Death (POD/TOD) for short term accounts

Post by 123 »

bacon4retirement wrote: Mon Sep 14, 2020 9:34 pm ...Any idea why it is not routinely included as an optional part of the application process for most kinds of personal accounts?...
The main reason I think it's not a routine part of the application process is because it could be a bottleneck or showstopper that could cause some customers to stop and think about things, and as a result they may delay opening the account or they might not come back and take their assets elsewhere. Financial organizations want to make it as easy as possible for customers to open accounts so they make the beneficiary process a seperate procedure in many cases.

Older customers, in their 50's and older, will be more conscious of the need to establish beneficiary designations. For customer's in their 20's naming a beneficiary is the furthest thing from their minds.
The closest helping hand is at the end of your own arm.
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LilyFleur
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Re: Payable on Death (POD/TOD) for short term accounts

Post by LilyFleur »

123 wrote: Tue Sep 15, 2020 12:40 am
bacon4retirement wrote: Mon Sep 14, 2020 9:34 pm ...Any idea why it is not routinely included as an optional part of the application process for most kinds of personal accounts?...
The main reason I think it's not a routine part of the application process is because it could be a bottleneck or showstopper that could cause some customers to stop and think about things, and as a result they may delay opening the account or they might not come back and take their assets elsewhere. Financial organizations want to make it as easy as possible for customers to open accounts so they make the beneficiary process a seperate procedure in many cases.

Older customers, in their 50's and older, will be more conscious of the need to establish beneficiary designations. For customer's in their 20's naming a beneficiary is the furthest thing from their minds.
I have routinely discussed financial/estate planning with my young adult children. At first one of them accused me of being morbid. And then I shared with them that their grandparents, who were financial planners, believed that making sure things go smoothly for your family after you die is a very loving thing to do.
My son started his first full-time job after college last year at age 23 and let me know that he had filled out the form and named his sister as a beneficiary for his Roth.
Cigarman
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Re: Payable on Death (POD/TOD) for short term accounts

Post by Cigarman »

Any account where this is available should be completed. I am in NC and my wife opened an account and failed to do this exact thing. When she passed I was fortunate that NC has a statute that allows up to $60,000 to be transferred to a spouse in assets (accounts, vehicles, etc.) without going through probate. As it turns out, not only was this account not a POD/TOD but neither was her car which was in both of our names. She passed away earlier this year and I was VERY fortunate that I could have these assets transferred to me without having to go through probate under NC law.

Had we done the paperwork properly, they would have automatically transferred to me. Without this law, those assets would have gone to her estate and been paid to her creditors (we did not have any joint credit card accounts).

So, regardless of the account, a POD/TOD should be named. One never knows when you might pass and it makes life so much easier for your survivors. As a side note, all of our other financial accounts were properly documented, it was just these two items. Word to the wise, check ALL your assets including vehicles and get it done.
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bacon4retirement
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Re: Payable on Death (POD/TOD) for short term accounts

Post by bacon4retirement »

Cigarman wrote: Tue Sep 15, 2020 4:00 am Any account where this is available should be completed. I am in NC and my wife opened an account and failed to do this exact thing. When she passed I was fortunate that NC has a statute that allows up to $60,000 to be transferred to a spouse in assets (accounts, vehicles, etc.) without going through probate. As it turns out, not only was this account not a POD/TOD but neither was her car which was in both of our names. She passed away earlier this year and I was VERY fortunate that I could have these assets transferred to me without having to go through probate under NC law.

Had we done the paperwork properly, they would have automatically transferred to me. Without this law, those assets would have gone to her estate and been paid to her creditors (we did not have any joint credit card accounts).

So, regardless of the account, a POD/TOD should be named. One never knows when you might pass and it makes life so much easier for your survivors. As a side note, all of our other financial accounts were properly documented, it was just these two items. Word to the wise, check ALL your assets including vehicles and get it done.
Washington allows up to $100,000 of assets before probate is required, so I was debating whether it was time well spent to set up TOD every time I roll over a portions of a $40k emergency fund CD ladder. Assuming I reach average life expectancy, spending a few minutes per transient account to set up TOD adds up to quite a bit of time over the next 40 years. I was not quite sure if TOD for each small account saves 30 minutes or 30 hours for the inheritor. My understanding had be that in Washington TOD changes the debt collection process rather than bypassing it completely.

Washington does not allow TOD for cars but does allow transfer common marital property which can include jointly titled cars. I am also not sure if it worth proactively worrying about small balances on a number of accounts like Paypal, Venmo, and Google Pay.
sailaway
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Re: Payable on Death (POD/TOD) for short term accounts

Post by sailaway »

It depends on your estate plan. Would those beneficiaries be any different than what your will states? Are their other POD funds that the beneficiary can use while awaiting probate, if needed?
Topic Author
bacon4retirement
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Re: Payable on Death (POD/TOD) for short term accounts

Post by bacon4retirement »

sailaway wrote: Tue Sep 15, 2020 9:40 pm It depends on your estate plan. Would those beneficiaries be any different than what your will states? Are their other POD funds that the beneficiary can use while awaiting probate, if needed?
Yes, the beneficiaries would be the same as the will. Yes, either spouse can ride through a multi-year probate using separately held accounts without even touching the POD brokerage accounts.
Katietsu
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Re: Payable on Death (POD/TOD) for short term accounts

Post by Katietsu »

bacon4retirement wrote: Tue Sep 15, 2020 10:20 pm
sailaway wrote: Tue Sep 15, 2020 9:40 pm It depends on your estate plan. Would those beneficiaries be any different than what your will states? Are their other POD funds that the beneficiary can use while awaiting probate, if needed?
Yes, the beneficiaries would be the same as the will. Yes, either spouse can ride through a multi-year probate using separately held accounts without even touching the POD brokerage accounts.
In this case, either choice would be reasonable. I might do it where it is easy but not where it is difficult.
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