Your goal should be to create a comprehensive estate plan individually tailored to meet your family’s unique needs and objectives. As a result, you must understand what alternatives exist to meet your goals and how they might work in your favor, including the use of payable-on-death and transfer-on-death accounts. An estate planning lawyer at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can evaluate your situation, present the full range of options available to you, and help you make the best choices for you and your family.
Understanding Payable-on-Death and Transfer-on-Death Account Designations
Payable-on-death (POD) account designations allow a beneficiary to automatically take ownership of the account upon the owner’s death. POD designations may exist on any deposit account, including checking accounts, savings accounts, and certificates of deposit. The beneficiary does not have to go through probate court to transfer ownership of the account to himself or herself. The only step the beneficiary must take is to present proof of the primary owner’s death to the financial institution holding the account.
A transfer-on-death (TOD) account designation is similar to a payable-on-death account designation. However, a TOD is used for securities, not deposit accounts. Securities include stocks and bonds, mutual funds, and brokerage accounts. Much like a POD designation, a TOD designation automatically transfers ownership of the securities account to the designated beneficiary without the necessity of the asset going through probate court. Again, all the TOD beneficiary must do to effectuate the transfer of ownership is to show proof of the account owner’s death.
POD and TOD beneficiary designations are easy and inexpensive to set up. You can set them up by filling out simple paperwork through the account’s financial institution. However, you should review your POD and TOD beneficiary designations periodically to ensure they remain in line with your wishes and treat your heirs equally if that is your goal.
POD Beneficiary Has No Rights to the Account During the Owner’s Lifetime
However, unlike a joint account holder, under Florida Statutes §655.82(2), the designated POD beneficiary has no right to the account until the primary account holder has passed away. As a result, account owners can withdraw funds, add funds, and change the payable-on-death beneficiary designation at any point as they see fit. For example, the POD beneficiary has no power or authority to prevent owners from draining their accounts during their lifetimes.
Joint POD Accounts
POD accounts with multiple owners are only effective if they are joint accounts with rights of survivorship. Therefore, if an account is designated as being held as “tenants in common,” any alleged POD designation is ineffective. As a result, if an account held by joint owners with rights of survivorship has a POD designation, then the death of one of the joint owners would result in ownership of the account automatically going to the surviving joint owner, not to the beneficiary. The POD beneficiary would not receive account ownership until the surviving joint owner’s death.
Furthermore, if more than one payable-on-death designation exists, the beneficiaries have equal rights to the account proceeds. However, unless otherwise provided for in a depository agreement dated between December 31, 1994, and July 1, 2001, there is no right of survivorship if one beneficiary passes away after that. Moreover, suppose there is no living beneficiary when the last surviving joint owner dies. In that case, the account belongs to the estate of the last surviving joint owner under Florida Statutes §655.82(3)(b).
Contact Our Office Today for All Your Estate Planning Needs
At Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A., an estate planning attorney can provide a full range of estate planning services, including payable on death and transfer on death account designations. In addition, if you lose a loved one, we are here to assist you with all estate and probate-related needs.
We can guide your family through the complicated legal landscape of estate planning law as quickly and efficiently as possible. Call us at (954) 966-2112 or learn more about the legal services we can offer you online. Please schedule an appointment to talk to us about your legal needs immediately.