The other day I overheard a couple talking about strategies for minimizing inheritance taxes. “Oh,” the man said, “if you designate your bank account as Payable On Death (POD) to a beneficiary, that beneficiary will avoid the whole tax thing!” The woman seemed very excited to hear this. Unfortunately, this man didn’t have it quite right. So here’s a little POD lesson that you may find useful.
POD is an arrangement between you and your bank or credit union. Specifically, when you designate account(s) as POD, the accounts pass outside of your Will. Upon your death, the designated beneficiaries will have access to the accounts without going through probate. (Just a reminder – all assets that pass through your Will must go through a probate process whereby a court determines whether or not your Last Will and Testament is valid.) So, designating accounts as POD avoids the waiting period associated with probate – and that’s a good estate planning option to consider. But it’s certainly not a tax-free strategy!
Every person’s situation is unique; and that situation keeps changing over time. A good estate planning strategy when you’re 30 may not be the right one when you’re 50. And what you put in place when you’re 50, may need to be revised when you’re 70. Bottom line, periodically reviewing your plans with a specialist is a good way to help insure that your estate planning needs are properly met over the course of your adult life, and that your heirs reap the benefits of proper planning.
Getting Legal Help
Experienced Estate Planning Attorney, Elga A. Goodman, can help you identify strategies and create an estate plan that addresses your concerns consistent with your stage in life. Contact us today at 973-841-5111.
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