POA* versus POD (2024)

FAQs

POA* versus POD? ›

Well, a POA is generally the designation. for a power of attorney that's authorizing somebody to. take care of your banking needs on that bank account. POD means payable on death, meaning upon your passing, it will go to whoever you've named as the beneficiary.

The POD names a beneficiary of an account. It would pass outside of probate, just as property in a living trust would. The trust is appropriate in some circ*mstances; it's hard to know without a more holistic understanding of your situation. The POA, or power of attorney, does not make the named person the beneficiary.

It is self-dealing for an attorney-in-fact to name himself as POD beneficiary. In most States, this would be a violation of the fiduciary responsibilities of the POA. You really need to talk to your own attorney and not the one that drafted the POA, as that in itself would be another conflict of interest.

There is no conflict of interest for a power of attorney to also be a beneficiary of an account (which is what a POD is). As long as the PoA did not add themselves to the account without the principle's instructions, there is no conflict and no self dealing.

The power and authority on an account ends as soon as the owner of the account is deceased. This means the bank can no longer provide a POA with any information on the account, nor can any money be taken out of the account when an owner is deceased. POD is the abbreviation for Payable on Death.

There are some potential disadvantages of being a power of attorney. The POA must be able to make serious choices that could involve the person's health and estate. If you breach your duty, you could owe the principal compensation for damages. The principal could sue you if you did not act in their best interest.

A Pay on Death (POD), aka Transfer on Death (TOD) and Totten Trust, allows the account owner to designate a specific beneficiary who will receive the funds in the account upon their death, bypassing the probate process.

POD accounts override a last will and testament. The named beneficiary on a POD account will receive the assets no matter whom they're designated to in the will. POD accounts can make debt, taxes and loans complicated upon the owner's death, especially if there are multiple beneficiaries.

Naming beneficiaries can help ensure that your money goes where you want it to go upon your death. A POA, on the other hand, can authorize your partner (or another named agent) to make decisions on behalf of your personal interests while you are alive, but no longer competent.

Yes, there is no limit to the number of POD beneficiaries allowed on an account. Each POD beneficiary will receive an equal share of the assets in an account at the time of the passing of the last owner on the account. For example, if there are 4 POD beneficiaries, each will receive 25% of the funds.

Which is better pod or beneficiary? ›

Upon death, the beneficiary automatically becomes the owner of the account, bypassing the account holder's estate and skipping probate completely. In the event that the owner of a POD account passes away with unpaid debts and taxes, their POD account may be subject to claims by creditors and the government.

That means that when the account owner (or the last surviving owner, in the case of a joint account) dies, the POD beneficiary can simply claim the money from the bank. The deceased person's will doesn't come into play, and there's no need for any probate court involvement, either.

Use a payable-on-death bank account to avoid probate.

Payable-on-death bank accounts offer an easy way to keep money—even large sums of it—out of probate. All you need to do is properly notify your bank of whom you want to inherit the money in the account or certificate of deposit.

POD accounts override a last will and testament. The named beneficiary on a POD account will receive the assets no matter whom they're designated to in the will.

There is no federal tax for beneficiaries of POD accounts. There will be an inheritance tax, or death tax, depending on the state, that will need to be settled before any money can leave the account. If the deceased has any debt that has not been settled, the money in the account must go to paying that off first.