The benefits and negatives associated with establishing transfer on death (TOD) and pay on death (POD) accounts has been debated for a long-time. The main benefit of an account of this nature is that the account assets will pass directly to the beneficiary(s) named on the account without
probate or being subject to the decedent’s
creditor claims. This is a simple way to transfer assets at death to an individual not involved in any dispute or litigation (divorce, bankruptcy, judgment creditor, etc.). In contrast, if the individual is involved in a dispute or litigation the assets passing outright to them could be at risk to the dispute or litigants claims. Consideration must also be taken if the individual named as the account beneficiary is a
“special needs” individual, as direct receipt of the account funds could result in them loosing eligibility for the government benefits they are receiving. In addition, a POD or TOD could alter the end result of the decedent's intended
estate plan.
