In this article, we’re exploring payable-on-death bank accounts, pros and cons, challenges, and how you can create a new banking relationship in the US from abroad to take advantage of this unique opportunity.
We’re also going to dig into both the pros and cons of these accounts and how they compare to other popular alternatives.
Feel free to jump ahead to the areas most relevant to you by using the table of contents below.
Table of Contents
- Payable on Death Bank Accounts 101
- Payable on Death Bank Accounts Pros and Cons
- Alternatives to Payable on Death Accounts
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
Payable on Death Bank Accounts 101
Depending on where you live, where your dependents live, and the jurisdiction where your bank accounts are held, it can often make sense to involve a lawyer to navigate the many variables that can impact your finances after you pass. This is especially true when dealing with assets in multiple jurisdictions or complex probate procedures.
Pro tip: It is always helpful to maintain a record of accounts so your executor, legal professionals, and beneficiaries will be able to avoid any mistakes in tracking checking, savings, and investment accounts across financial institutions and borders.
Needless to say, cross-border assets can be confusing even for the most prepared executors, and beneficiaries, who may be wondering what information (e.g. bank statements) they are even entitled to see.
So, if it makes sense for your situation, be sure to involve a qualified legal professional to help you understand your options.
That said, generally speaking, payable-on-death bank accounts are a straightforward option that allows an individual to pass on financial assets to an intended beneficiary. In order to set up a payable-on-death bank account, the account owner must complete the necessary documents with their bank.
Not surprisingly, each bank has a slightly different process when it comes to setting up a payable-on-death bank account. So, it’s important that you contact your bank (or account manager) directly to confirm the options before moving forward.
However, before contacting your bank, it’s important to consider all of the payable-on-death bank accounts pros and cons so you can fully assess whether this is the best option for you.
If this is your first time visiting GlobalBanks, don’t forget to download your FREE US Banking Starter Guide. It’s designed to help non-residents with opening bank accounts at top financial institutions in the US.
Payable on Death Bank Accounts Pros and Cons
Here is an overview of the payable-on-death account pros and cons. These pros and cons should be considered before contacting a bank to set payable on death accounts:
Pros of Payable on Death Accounts
- Avoids probate on funds held in payable-on-death accounts
- Access to the funds by the account holder during their lifetime
- Payable-on-death accounts can be divided among multiple beneficiaries
- Distribution of the funds after death is a straightforward process
- Cost to set up a payable-on-death account is low compared to alternatives
Cons of Payable on Death Accounts
- Conflicts with a will or trust can confuse and delay distribution
- Accidental disinheritance when all beneficiaries are not included
- Creditors have the right to claim against payable-on-death accounts
- No contingent beneficiaries can be named on payable-on-death accounts
- Payable-on-death accounts can complicate inheritance and estate taxes
Alternatives to Payable on Death Accounts
Alternatives to a payable-on-death account can range from a simple letter of wishes to complex trust structures.
In fact, any method that can be used to distribute financial assets to beneficiaries after a death can be considered an alternative to payable-on-death accounts.
That said, the suitability of each option ultimately comes down to the type and complexity of the assets being held, the value of assets being distributed, and the nuances of the beneficiaries, relationships, and jurisdictions.
With this in mind, it is often suggested that you should consider working with a qualified legal advisor familiar with estate and inheritance issues, including the nuances of the specific assets you hold and the jurisdictions involved.
Frequently Asked Questions
Below are two of the most common questions that we receive from people about payable-on-death accounts. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
Do Beneficiaries Automatically Claim the Money in a Payable on Death Account?
Beneficiaries can claim the money left to them in a payable-on-death account after the original account holder has passed. However, before funds are released, the beneficiary will need to present a death certificate (and possibly other documents) to the bank, in order to verify the death of the original account holder. After the death has been verified, the bank will release the funds to the beneficiary.
How Do I Set Up a POD Account?
In order to set up a payable on death (POD) account, an account holder must contact a bank and request the necessary documents in order to assign a POD beneficiary. Each bank has different requirements, so the process can differ slightly depending on the bank where your accounts are held.
Ready to Open Accounts With Banks in the USA?
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