Estate planning in Cincinnati, Ohio involves arranging for assets that you own now to be transferred to others after you die. There are many different ways to make this happen. Some of them are more effective than others. With this in mind, let’s look at TOD or POD accounts in Cincinnati, Ohio.
In this context TOD stands for “transfer on death,” and POD stands for “payable on death.” These two terms are interchangeable.
When you start a bank or a brokerage account, depending on the rules of the institution you probably have the option of adding a beneficiary. This is what a POD account is all about. You add a beneficiary, and the beneficiary becomes the owner of the account after you die.
The beneficiary that you choose does not have access to the funds while you are still living. This is a positive for most people. You can make all the decisions, and you can exhaust the funds in the account or close the account entirely if this is your choice.
Let’s say that you did not have a payable on death account, but you had a bank account. You created a Last Will to express your final wishes. You want the money in the account to be split between your three children.
They will not receive their inheritances until the estate has been probated. Probate is a legal process. The administration of your estate is going to be supervised by the probate court.
Probate can be time-consuming. If the case is very simple and straightforward the heirs to the estate would not receive their inheritances for months. More complicated cases can take significantly longer.
On the other hand, let’s say that you have the same type of account with the same bank, but it is a POD account. You could add a beneficiary. Depending on the rules of the institution, you may be able to add multiple beneficiaries.
For the purposes of this example, we will assume that the institution you are working with does allow multiple beneficiaries. If you name your three children as the beneficiaries, they would split the money in the account after you die.
The probate process would not be a factor. Payable on death accounts enable asset transfers outside of probate.
Drawbacks of a POD Account in Cincinnati
POD accounts do facilitate probate avoidance. However, there are certain drawbacks that go along with them.
If you wanted to add multiple beneficiaries, you may have to allow for an equal split. This may not be consistent with your wishes.
The beneficiaries would not be able to access the funds in the event of your incapacity. This can also pose a problem.
In addition, people can be disinherited if you were to leave behind verbal instructions to one beneficiary with regard to the distribution of the assets in the account. The beneficiary would not be legally compelled to follow these instructions.
POD accounts are interesting, but there are more comprehensive solutions. You may want to explore all of your options with the benefit of legal counsel before you decide on any particular course of action. Contact The Zimmer Law Firm to help with your estate planning needs 513.721.1513.