It's like doing your taxes with a Form 1040EZ. You decide who should inherit your financial assets. Then you contact your bank, brokerage or mutual fund company and request a form. Fill in your name, address, social security number and the beneficiary's information. Sign the form. That's it. You're done.
Payable on Death (POD) and Transfer on Death (TOD) registration forms are actually informal revocable trusts that allow you to designate who will receive your accounts after you die. Until then, you have complete control and can deposit or withdraw money or change beneficiaries.
Banks offer POD registration for certificates of deposit and for checking and savings accounts. Registration comes with a bonus: additional FDIC insurance for qualifying beneficiaries, who may include your spouse, siblings, children, grandchildren and parents. Transfer on Death forms are used to register stocks, bonds, mutual funds and brokerage accounts, and they are legal in every state except Louisiana and Texas.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
These accounts work best if you name a single beneficiary for each account. Assets avoid probate and pass directly to the individual named. Although your creditors generally don't have access to the funds, the money is included when your executor calculates whether estate taxes are due. If your estate is large enough to owe taxes (estates up to $2 million are exempt from federal taxes this year), your beneficiaries may have to pay Uncle Sam.
A POD designation trumps your will, warns Marsha Murray-Lusby, a Portland, Ore., lawyer who specializes in estate planning. For instance, if your will stipulates that your children should share equally and the POD accounts they inherit are unequal, there's no guarantee that they'll agree to transfer money to one another to equalize the bequests. And even if they are willing to exchange funds, doing so could trigger gift taxes this year if the amount is more than $12,000. Says Kathleen Nagle of the FDIC, "Make sure this is what you really want to do."
-- Joan Goldwasser
-
457 Plan Contribution Limits for 2025Retirement plans There are higher 457 plan contribution limits for state and local government workers in 2025 than in 2024.
-
Medicare Basics: 11 Things You Need to KnowMedicare There's Medicare Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare — and much more.
-
Six of the Worst Assets to Inheritinheritance Leaving these assets to your loved ones may be more trouble than it’s worth. Here's how to avoid adding to their grief after you're gone.
-
SEP IRA Contribution Limits for 2024 and 2025SEP IRA A good option for small business owners, SEP IRAs allow individual annual contributions of as much as $69,000 in 2024 and $70,000 in 2025..
-
Roth IRA Contribution Limits for 2024 and 2025Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
-
SIMPLE IRA Contribution Limits for 2024 and 2025simple IRA The SIMPLE IRA contribution limit increased by $500 for 2025. Workers at small businesses can contribute up to $16,500 or $20,000 if 50 or over and $21,750 if 60-63.
-
457 Contribution Limits for 2024
retirement plans State and local government workers can contribute more to their 457 plans in 2024 than in 2023.
-
Roth 401(k) Contribution Limits for 2025retirement plans The Roth 401(k) contribution limit for 2024 is increasing, and workers who are 50 and older can save even more.
