Estate planning involves a lot of choices. Many people ultimately use “payable on death” (POD) designations for things like their bank accounts, retirement funds, stocks and other investments to make sure that they are directed to the appropriate beneficiary.
Designating beneficiaries via this process usually eliminates the need for these assets to pass through probate, meaning that their transfer may happen more seamlessly than it otherwise would — but you need to understand how these transfers work so that you don’t make a mistake with your estate plans.
Existing laws prioritize PODs above wills
Many testators assume that their will takes precedence over all other estate planning documents. That’s not the case if you have a POD or other beneficiary designation in place, though, on your accounts. Beneficiary designations take priority over anything contained in other estate planning documents.
This is particularly important to remember as your encounter changes in your life that may require you to update your will. Since you will has no bearing on a payable-on-death designation, you need to remember to update those particular documents at the same time. You can reach out to your retirement fund manager, bank and investment management company to let them know about the changes you want to make to your beneficiary designations.
Where to turn for help in understanding the estate planning process
An estate planning attorney can explain what PODs and other beneficiary designation options are and how they fit into the overall estate planning framework. This knowledge may aid you in determining what options are best for protecting your beneficiaries’ interests.