Benefits of a Payable on Death (POD)
A payable-on-death (POD) designation is a seamless way to transfer an asset without probate and is straightforward to implement.
If you have a Last Will and Testament and your account has a POD, the account will not transfer through the Will; instead it will transfer to the designee in your POD.
Learn about the benefits of a POD to avoid inheritance headaches for your loved ones.
How does a POD work?
The POD provides legal authorization to the financial institution to pay the account funds to the named designees after the account owner's death. The owner of the account has to execute a POD form with the financial institution. If it is a joint account, both owners have to complete the POD form.
Does a POD give access to the designee?
No, a POD designee does have access to the account until the owner’s death. 633D.7
Should I use a POD or add the beneficiary to the account?
You should use a POD in almost all circumstances. Obtain advice from an attorney about your specific situation. Avoid adding a person as an owner to your account because they will have legal access to all the funds.
If you want to allow a person to access your account to help manage your finances, you should use a power of attorney instead. Learn more about Power of Attorney in Iowa.
How does a POD affect an authorized user?
An authorized user on an account is effective for the owner's lifetime. Once the owner passes away, access to the authorized user is terminated. If there is no POD on the account, the account's assets can only be distributed following the Iowa Probate Code 633. If the account is under $50,000, a small estate affidavit may be an option. The option of a small estate affidavit depends on the other assets of the estate and how they transfer after death. Read more about small estates in our article “What is a Small Estate in Iowa?”
Can I change a POD?
Yes, if you are the account owner, you can change the POD. You should change a POD if you no longer want the designated person(s) to receive the funds at your death.
The owner of the account completes a new POD form with the financial institution to change a POD.
Does a POD avoid creditors?
No. However, the creditor has to pursue a claim against the designee within two years from the owner's date of death. 633D.8(3)
If an estate is open in probate and there are insufficient assets to pay the costs, the POD designee will have to turn over the funds.
If there is an Iowa Estate Recovery claim by the State of Iowa, the assets transferred to the designee have to be paid to Iowa Estate Recovery if the other assets of the estate are insufficient to settle the claim.
How is a POD part of my estate planning?
Estate planning involves legally transferring your assets to a person after your death. When you use a POD, you are establishing with the financial institution that the funds in your account will go to your POD designee.
When can I add a POD to my account?
You can do it whenever the financial institution is open for business. Certain institutions allow you to add a POD while being logged in on their website using your secure online account.
Getting your assets in order
An asset transfer plan is part of the Will in a Day® and Revocable Trust package with Hope Wood JD. As part of the process, your attorney will review the type of asset that you have and discuss the best way to set up the asset transfer to your beneficiary. Learn more about estate planning with Hope Wood JD at https://www.hopewoodjd.com/estate-planning
