What happens when you lose a loved one and you want to access the banks accounts as the next of kin? Does the process come easy or are there other means that is not as knotty as the process tied to being a next of kin?
When faced with the loss of a loved one and the desire to access their bank accounts as the next of kin, the process can be complex.
However, a payable-on-death (POD) bank account serves as a convenient alternative.
What is a POD?
A POD account expedites the transfer of assets by allowing the account holder to designate beneficiaries who will receive the funds directly after their demise. This avoids the protracted probate process, ensuring swift access to the funds for beneficiaries, which can be crucial for covering immediate expenses like funeral costs.
The POD account requires the account holder to name one or more beneficiaries, who can be individuals, groups, nonprofits, businesses, organizations, or trusts. Notably, the account owner or co-owner cannot be listed as a beneficiary.
What really happens to the bank accounts of a person after demise?
The beneficiaries need to provide a death certificate, personal identification, and a beneficiary letter of instruction to access the funds. Unlike other legal processes, there’s no requirement for a third party, such as a trustee or lawyer.
Setting Up A POD
Setting up a POD account offers several advantages, including no monetary restrictions on withdrawals by beneficiaries, free setup without the need for an estate planning attorney, and a straightforward process requiring only basic beneficiary information. Additionally, POD accounts bypass probate, ensuring a quick and efficient transfer of assets to beneficiaries.
While POD accounts can cover simple financial situations, like transferring your bank account assets to a beneficiary, they’re less flexible and provide fewer protections for your beneficiaries than revocable living trusts.
To receive the funds, the beneficiary must show the bank a death certificate and personal identification along with a beneficiary letter of instruction. No third party, like a trustee or lawyer, is required.
The Challenges Inherent
However, POD accounts have limitations and drawbacks. They are specific to certain account types and may override wills and trusts if not carefully coordinated.
Additionally, they may not be suitable for individuals utilizing complex tax strategies, as they might forfeit certain tax advantages.
Despite these considerations, POD accounts can be a valuable component of estate planning, facilitating the direct transfer of bank assets to heirs.
It’s equally essential to recognize that while POD accounts offer efficiency, they are not a substitute for comprehensive estate planning, and consulting with a qualified financial consultant or lawyer is advisable to determine the best strategies based on individual needs and circumstances.
Written by Fortune Omosola
Many Banks do not afford the use of this opportunity.. They refuse to issue out POD. forms to be completed. They want to. Continue to sit on Billions of Naira belonging to the dead to boost their accounts. The CBN should look into the enforcement of this.