Legal Definitions - pay-on-death bank account

A pay-on-death (POD) bank account is a type of bank account that allows the owner to designate one or more beneficiaries who will directly receive the funds held in the account upon the owner's death. During the account owner's lifetime, they maintain full control over the account, including the ability to deposit, withdraw, change beneficiaries, or close the account entirely. Upon the owner's passing, the funds are transferred directly to the named beneficiaries without needing to go through the often lengthy and public probate court process, offering a simple and efficient way to transfer specific assets.

Here are some examples:

• Example 1: Planning for a child's future

  Maria wants to ensure her daughter, Sofia, receives her modest savings account balance quickly and easily if Maria passes away. Maria visits her bank and adds a pay-on-death designation to her savings account, naming Sofia as the sole beneficiary. If Maria dies, Sofia can present Maria's death certificate to the bank and directly access the funds, bypassing the need for a probate court order and ensuring a swift transfer of the money.

• Example 2: Supporting a cause or multiple heirs

  John and his wife, Susan, have a joint checking account and wish to leave a portion of the funds to their nephew, Alex, and another portion to their favorite local animal shelter upon the death of both of them. They can establish a pay-on-death designation on their joint account, specifying Alex and the animal shelter as beneficiaries and allocating a percentage of the funds to each. This ensures that these specific assets are distributed according to their wishes without becoming part of their probate estate, providing clear instructions for the bank.