Before a deceased person’s assets can be distributed to their heirs, their will has to be validated and their estate’s debts must be settled. This happens during the probate process, and it can drag on for months. Georgia residents who wish to avoid probate often choose to include trusts in their estate plans, but there is a simpler alternative available to individuals who have most of their money in bank accounts or certificates of deposit.
Payable on death arrangements
If this describes your situation, you could ask your bank or credit union to make your accounts and CDs payable on death. If you do, your chosen beneficiary will become the owner of the accounts and CDs as soon as the bank learns about your death. Setting up POD arrangements is much simpler than drafting trusts as all you have to do is fill out paperwork that tells the bank or credit union who your chosen beneficiary is. This is also known as a Totten trust, and it gives the bank or credit union authorization to convert your accounts or CDs into PODs. Most POD accounts have a single beneficiary, but you can choose to have more if you wish.
Creditors and beneficiaries
Your beneficiary must present your credit union or bank with a valid government-issued ID to take possession of your POD accounts or CDs, but they may not be entitled to all of the money they contain. That is because your creditors or the government could make claims on the funds if you pass away with debts or unpaid taxes. POD accounts are prioritized under Georgia’s wills and probate laws, so you should make sure that your will and Totten trust have the same beneficiary to avoid a dispute.
A simple alternative to trusts
POD accounts offer Georgia residents an attractive alternative to trusts. The paperwork required to convert bank or credit union accounts and CDs to PODs is fairly straightforward, and ownership of the accounts or CDs can be transferred without waiting for approval from a probate court. If you decide to set up POD arrangements, you may be able to avoid estate disputes by making sure that the beneficiary you choose is also the person you name in your will.