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Payable on Death Beneficiary Account: What You Need to Know

posted on 4/14/2023 by Nate Schroeder in Press Releases

A payable on death (POD) beneficiary account is a financial account that designates a beneficiary to receive the account’s assets upon the account owner’s death. These types of accounts are often used to avoid probate, which is the legal process by which a deceased person’s assets are distributed to their heirs or beneficiaries. 

How Does a Payable on Death Beneficiary Account Work?

When an account owner sets up a POD beneficiary account, they name a specific person or organization as their beneficiary. Upon the account owner’s death, the beneficiary named on the account gains ownership of the account’s assets. The beneficiary can then access the account funds without having to go through probate.

One of the key benefits of using a POD beneficiary account is that it allows the account owner to avoid the time and expense associated with probate. This can be particularly beneficial for those with relatively small estates, as the cost of probate can quickly eat into the value of the estate.

What Are the Risks of Using a Payable on Death Beneficiary Account?

While there are many benefits to using a POD beneficiary account, there are also some risks to be aware of. One of the most significant risks is that a POD beneficiary account does not offer the same level of flexibility as a will or other estate planning device.

For example, if the account owner names a minor child or other vulnerable beneficiary as their POD beneficiary, there is a risk that the beneficiary may not be equipped to manage the funds effectively. In such cases, it may be better to set up a trust that can manage the account assets on behalf of the beneficiary.

Finally, it’s worth noting that a POD beneficiary account may not be recognized in all states. Some states require that account assets go through probate, even if a POD beneficiary has been named on the account. For this reason, it’s important to consult with a qualified attorney who can advise on the specific legal requirements in your state.


A payable on death beneficiary account can be a convenient and cost-effective way to transfer assets to your beneficiaries upon your death. However, it’s important to understand the potential risks and limitations of these types of accounts before setting one up. If you’re considering a POD beneficiary account, consult with a qualified JSC Legal Estate Planning Attorney who can help you weigh the pros and cons of this estate planning tool.

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About The Author

Nate Schroeder practices in civil litigation and is a partner at JSC Legal. His practice focuses on cases involving probate litigation (will contests), personal injury (car accidents), and professional negligence. Nate received his undergraduate degree from University of Iowa and law degree from the Drake University and has been with the firm since 2013.