Estate Planning, Oklahoma, probate

Payable On Death (POD) – Good or Great Idea?

Avoiding probate is one of the most common concerns clients have when they come to Skillern Law Firm, PLLC. One of the easiest ways any individual or family can avoid probate on their bank accounts is putting a Payable on Death (POD) designation on the account.  A POD designation allows the account to pass from the deceased account owner to the POD beneficiary without having to go through probate in Oklahoma.

Let’s back up. Payable on death, or “POD” as it is known in the estate planning world, is used by most attorneys in this area of law. Bank accounts generally allow the owner to designate a POD beneficiary on the account.  It’s usually a pretty easy process of filling out the bank’s form, sending it in with the POD designation on the form clearly noted, and voila!

A POD beneficiary can be a individual, trust or a nonprofit organization.  What a POD designation does is it makes the bank contractually obligated  to pay the account proceeds to the POD beneficiary after the account owner has passed. However, before the bank turns the money over, the bank is required to pay any party holding a security interest and must generally receive approval from the Oklahoma Tax Commission.  If the POD beneficiary is living, the bank will pay the proceeds directly that designated beneficiary. If, however, the POD beneficiary is not living, and there is no secondary or contingent beneficiary named, then the bank will have to pay the monies in the account to the estate of the deceased beneficiary, as opposed to the estate of the account owner. The bank owner may establish a primary beneficiary and other contingent beneficiaries. However, if more than one primary beneficiary is named, then no contingent beneficiaries can be named.  If more than one primary POD beneficiary is named, then the beneficiaries will split the assets in the account equally.

Other than bank accounts, Oklahoma has slightly different rules for loans, savings accounts and credit union accounts, so make sure what type of institution and/or account you own before utilizing a POD, and call the institutions to make sure you are following their rules and forms.   If you are interested in learning more about a how to set up a POD designation, probate avoidance or properly funding your trust, please set up an appointment with Skillern Law at your convenience.

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