Jeff Ritchie

Jun 26 2017

Part 2 of 2: Examining Account Types – Payable on Death Accounts

An account that contains a “Payable on Death” (POD) designation is very different than an account just in your name.  You are strongly advised to consult with your estate planning attorney before adding or removing POD designations as changes may impact your overall estate plan including any tax-planning techniques.

Before you add a POD designation, you should consider the following:

  • A POD designation will override what is in your Will or revocable trust.
  • A POD account will not be paid over to your executor or successor trustee at your death to be distributed in accordance with your Will or revocable trust.
  • If all of your bank accounts are POD accounts, you may leave your executor or successor trustee without any cash to pay your final expenses and ongoing expenses such as property taxes, insurance and utilities.
  • A POD account will pass immediately to your named beneficiary or beneficiaries. There is no obligation for them to share the proceeds with anyone else. If they do try to share the proceeds, there may be gift tax implications.
  • If you name multiple individuals, a POD account will pass only to those who survive you. This may be different from what you have in your Will.
  • If an estate is probated for you, the POD account will still be listed on your Report and Inventory filed with the Court.
  • If you die a resident of Iowa and name a beneficiary who is not exempt from Iowa inheritance tax (exempt persons include spouse, lineal descendants and lineal ascendants), the beneficiary will owe Iowa inheritance tax on the POD account.
This is intended for educational purposes only.  Hills Bank cannot provide legal advice.  If you have any legal questions, we suggest consulting your attorney.

View the complete Examining Account Types Series:
• Part 1 – Examining Account Types – Joint Accounts with Survivorship
• Part 2 –Examining Account Types – Payable on Death Accounts

Jeff Ritchie

About Jeff Ritchie

Jeffrey Ritchie, JD is Vice President with Trust and Wealth Management at Hills Bank’s North Liberty location on Forevergreen Road. He has been at Hills Bank since 2005 specializing in personal trusts and estate administration. Jeffrey’s professional expertise includes estate planning and probate, real estate, and income tax preparation. Jeffrey earned his undergraduate degree at the University of Northern Iowa and continued his education at the University of Iowa College of Law. Prior to joining the bank, he practiced law in the Amana and Marengo communities. Jeff can be reached at 1-800-899-8858.

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