When you are opening an account at a bank you may be offered the opportunity to select a payable on death (POD) option. This can also be done at some financial services companies that you may use when you buy and sell securities.
With these accounts you name a beneficiary. As the name suggests, when you as the primary account holder pass away the assets that are left in the account become the property of your beneficiary.
There are some positives that come along with these accounts. They facilitate a direct transfer of assets outside of the process of probate, and this is a large part of the appeal. You also retain control the funds throughout your life and have the right to change beneficiaries or even close the account if you want to, and this flexibility is certainly a good thing.
However, payable on death accounts are not a comprehensive estate planning solution. These assets are part of your estate for estate tax purposes so they do nothing to provide tax efficiency. There are no incapacity provisions, and you may not be able to give varying percentages of the resources left in the account to multiple respective beneficiaries.
The best way to develop a plan that is ideal for you and your family is to sit down and discuss all of your options with an expert. Should you be interested in doing so, right now would be a good time to pick up the phone to arrange for an informative consultation with a licensed and experienced Cleveland OH estate planning lawyer.