There are numerous ways to transfer assets to an heir when you pass away. Many people will simply put these assets in their will, and they can then name beneficiaries who take control of the assets. The estate executor inventories the assets, pays off debts and then distributes these assets to the beneficiaries.
But another option that you may want to consider is known as a POD account, or a payable-on-death account. How is this different and what benefits may it have?
Naming a beneficiary in advance
Like a will, a payable-on-death account requires a beneficiary designation. This is set up in advance and connected directly to the financial account. When someone passes away, the beneficiary takes over control of the account.
For example, maybe you want to pass the contents of your savings account to your heirs. You could put the funds from that account into your will and let the estate administrator deal with it. But you could also convert the savings account into a POD account, name an heir as the beneficiary, and then allow them to take immediate control when you pass away.
There are some benefits to doing this. It is often faster and more efficient. It also means that the account avoids the probate process, so the estate plan isn’t going to be challenged by a different beneficiary.
That said, both POD accounts and wills are merely examples of some of the estate planning tools you have at your disposal. Be sure you take the time to carefully consider all of your options and the legal steps you’ll need to take.