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Financial Accounts FAQ

October 14, 2012
The Intelligencer / Wheeling News-Register

What does "POD" mean? Or "TOD"?

While they are not acronyms used every day by most of us, they are important ones for financial purposes. They stand for "payable on death" and "transfer on death" and refer to the process of transferring the balances of certain types of accounts to a new owner when the original owner passes away. This may be a worthwhile way to ensure that certain funds go where you want them even though you've already had your will prepared.

This type of designation can be added to a checking, savings or stock account by the financial institution holding the account, at your request. Doing that does not give the future recipient any control over the account now. The individual will receive the funds in them only when you have passed away. Certificates of deposit can also have the POD designation added to them.

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If you add, for example, "POD Mary Smith" to your checking account, then the remaining funds will be transferred to Mary only when you pass away. Mary will have no ability to use the funds until that time.

Also, doing this can speed up the administration of the estate and lower the administrative costs. Consult your financial adviser to make sure that these changes will not hurt your overall estate plan.

Nonprofit organizations can be made the POD or TOD recipient of any of these accounts also. It can be a way to carry out your personal dream for helping the organization without affecting how those funds are used during your lifetime. It is easy to do and does not require the assistance of an attorney.

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