A Payable on Death Account, or POD account, is a financial tool that is commonly used to keep monetary assets out of the probate system. Setting up a POD designation is simple. Pay-on-death (“POD”) or transfer-on-death (“TOD”) accounts offer an easy way to keep money – even large sums of it – out of probate. In addition to timely filing a creditor’s claim in the decedent’s estate, the creditor must also file a petition under Probate Code Section 9653 and show that the designation of the POD beneficiary was done with the intent to defraud creditors, under Civil Code Section 3439.05. You may also run into issues by trying to use a Will to change a POD designation. Please call your lawyer. This is often handled with payable-on-death (POD) and transfer-on-death (TOD) accounts. Most every type of bank account is allowed to be a POD account. They will also need to show valid identification and fill out transfer forms. Your POD beneficiaries can close your accounts simply by providing your bank or investment firm with a copy of your death certificate. Claiming a POD account is a straightforward process. Adding beneficiaries to financial accounts is another creditor-busting move, since those assets avoid probate upon the death of the first account owner. Some states have a short waiting period, but otherwise the beneficiary can claim the funds immediately. The credit card company can file a claim for the money. A POD account is recognized by the court as a valid method to avoid going through probate. Payable on Death Accounts. Creditors can go after the money in your bank account in certain situations. Creditors could demand that the beneficiaries who inherited assets use them to pay some or all of the debt. He had only small amount of money that was in his checking account, and I signed a statement from the bank stating that he did not have any outstanding debt. While a POD designation normally takes precedence over a will, many states have laws that allow your heirs and creditors to challenge the validity of a POD designation in court. Assuming that the decedent did not rearrange his accounts in order to avoid the payment of creditors then the creditors would likely have a difficult time getting payment from the POD beneficiaries. If the judge accepts the validity of the claimant's dispute, the judge can order your bank to freeze the account so the POD … However, if someone co-signed or guaranteed the decedents accounts then that person(s) would likely be liable for the full amount due. It is usually set up when the bank account holder gives the bank directions to transfer the funds to another person upon the death of the account owner. When it comes to creditors, not all assets in an estate are handled in the same way. The POD money must pay the creditors just like it would have to pay federal or state estate taxes if those were due. The beneficiary goes to the bank or credit union holding the account and presents a copy of your death certificate. But in this instance, it's the deceased person's creditors that won't get access to the money, not the creditors of the beneficiaries. You notify your bank, credit union, or investment advisor that you want to name a beneficiary for the account. How Pay-On-Death Accounts Cause Difficulties for Creditors. The owner simply files the required forms with his bank to set up this account. If a creditor takes you to court and wins a judgment against you it can do a bank levy, which is the same as a bank garnishment. -Creditors: You can’t use a POD to empty an account and short-change creditors. 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