In some sense, a payable-on-death (POD) account is not much different from any other financial account or bank account. You can use it to hold funds, and you can make withdrawals or deposits as you wish. You have full control over the account and no one else can access it.
The difference is that you have also selected a beneficiary. If you pass away, then the beneficiary gets the funds from that account. They become the new owner of the account and they can do whatever they wish with the money. They don’t have any power prior to your passing, so a POD account is essentially part of your estate planning process.
They can access the money quickly
One of the benefits is that the beneficiary can usually access the money in just a few days. The rest of your estate may have to go through probate. There could be will challenges and contests. It may take months for beneficiaries to actually get their inheritance. But a POD account is available much sooner, which can be helpful.
It can’t be challenged
Speaking of will contests, another benefit of a POD account is that it isn’t part of your estate and it isn’t going through probate. This means that other beneficiaries cannot challenge your decision. This reduces the odds of a dispute between multiple people who all wanted access to those funds. Only the beneficiary that you named gets access, and there is nothing anyone else can do to challenge that decision.
While making a comprehensive estate plan, it’s important to look into all your options, and it can help to have legal guidance.