A “ pay on death account” is a popular, and inexpensive, estate planning tool. A person owns a financial account which, on the title, provides that all money is paid upon the person’s death to one or more other people (usually children). The account title and proceeds are transferred upon the owner’s death without probate.
A caller asked me whether he could make his POD designation irrevocable and thereby protect the account from his creditors during his lifetime. He suggested than an irrevocable pay on death designation would give his payees a vested interest in the account which would have priority over the interests of his lifetime creditors.
I don’t think this would work. I see a POD account is similar to a living trust with testamentary (on death) instructions. The owner has right to withdraw and use the money in the account during his lifetime. The owner could empty the account or revoke the account even through the POD instruction is irrevocable (assuming that it could be irrevocable). Because the owner has full rights to the money, his creditors can get the money in the POD account unless the money is otherwise exempt.
Jon;I am a client of yours.I have a large judgement against me.Homestead is protected. no mtg.Home is left to the children if I should die. Is it still protected from creditors? If not, we need to get together to make some changes in my will to protect it.Also, advise on pft.sharing plan and annuity.