Before we discuss what happens to payable on death accounts following someone’s passing, let’s define what this process is. A payable on death (POD) account is an instrument that is designed by banks and credit unions. They provide a form for account holders to fill out in order to list beneficiaries who will receive funds upon their passing. These funds are transferred immediately when a death certificate and identification is provided by the beneficiary. These forms are typically filled out as part of the estate planning process.
Payable on death accounts are a popular means for preventing probate. How, exactly, does the payable on death process work?
The process is pretty straight-forward, and simple for the beneficiary to follow. They go to the bank or credit union where the account (or accounts) are held, and fill out some additional forms. At this point, a certified copy of your death certificate and valid identification must be provided. Once these simple steps are followed, the accounts immediately become the beneficiary’s.
This is not a perfect solution, though, and there are some considerations that must be addressed by the payable on death account benficiary:
- Payment of income taxes: Even though the beneficiary receives your pay on death account without incurring any associated fees, there are considerations one must address if this account is interest-bearing. All interest the account earns prior to your passing must be reported on your last income tax return. Following this return, the future interest earnings must be filed by the beneficiary.
- Payment of estate taxes: Your estate planning attorney will alert you to estate taxes that may be owed following your passing. When creating a will, or a living trust, these instruments outline if the beneficiary of the payable on death account is required to use a portion of those funds to cover the estate tax bill. If you do not have wills and trusts, the state in which you reside will handle how these taxes are paid and by whom.
Estate planning and avoiding probate are two tricky processes, but essential overall. Adding payable upon death accounts not only ensures staying out of probate court, but it helps distribute your assets efficiently and without hassle. Confer with your estate planning lawyer about additional ways you can avoid probate, as well as additional ways to reduce estate taxes. Remember, creating a will does not guarantee you will not go into probate following your passing.
He has invested considerable time and energy helping to educate others in estate planning and is widely regarded as a dynamic speaker who can make even the most complex estate planning issues easy to grasp. He provides free monthly seminars to inform the public on the importance of proper estate planning. Over the past fifteen years, thousands of people have come to hear him speak. “Helping people understand their options for estate planning is very important to me,” Robert said. “I like to think that people in our community can look to me for the kind of quality information they need to decide what is best for them and their families.”
His abilities as a listener and communicator are no accident. Robert’s undergraduate degree, which he obtained in 1980 from the University of Miami in Coral Gables, is in English Literature. He received his Juris Doctor degree from the Cumberland School of Law at Samford University in Birmingham, Alabama in 1983 and has been in practice ever since. He is a member of the Port St. Lucie Bar Association, the State Bar of Florida, the Martin County Estate Planning Council, the National Academy of Elder Law Attorneys and the American Academy of Estate Planning Attorneys.
Robert has been serving the legal needs of Florida residents since 1984. He provides his clients with carefully prepared estate plans that reflect each person’s and family’s unique goals and dreams as well as their financial situation. “Everyone has different needs when it comes to passing on their hard-earned wealth to their loved ones,” he explained. “That’s why one of the most important traits I bring to my client relationships is my ability to listen. Only by paying close attention to what my clients want and need can I deliver them a plan tailored to fit their lives. In fact 90% of our clients tell us we exceed their expectations.”
The Kulas law firm is also a family business. His wife, Roberta, is one of four legal assistants. His brother, Andrew, an associate attorney in the Vero Beach office, assists clients in the estate planning process. The Kulas’ are the parents of two young boys, Kyle and Alexander, and enjoy traveling, golf, fishing, and family outings.
Latest posts by Robert Kulas (see all)
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