POD (Payable on Death) Bank Accounts

People frequently create POD  (Payable On Death) Bank  Accounts   for a variety of reasons.

A POD  Bank Account remains the property of the individual who creates the account. They have complete control over the account during their life. In theory, upon their death the balance in the account becomes the property of the named beneficiary.

This type of account is particularly popular for people who, for whatever reason, want to avoid probate.

Attorneys in Pennsylvania who are members of the Pennsylvania Bar Association Probate, Estates and Real Property Law Section have the opportunity to participate in a listserv where attorneys may post questions or comments and get responses from other attorneys who practice in the same area of law.

Recent posts regarding POD Accounts highlighted the misconception among many experienced attorneys regarding POD Accounts.

The conventional wisdom is that administration expenses and debts are payable from probate assets only. Probate assets are assets which are controlled by the Personal Representative during the administration of an estate. Therefore non-probate assets such as POD Accounts should pass free and clear of claims for administration expenses, debts or spousal claims.

One frequent commentator on the listserv pointed out the decision in In Re Estate of Stevenson, 436 Pa.Super.Ct576, 648 A.2d 559 (1994) which held that “In Trust” Accounts like POD Accounts are subject to the claims of creditors and for administrative expenses if the probate assets were insufficient to satisfy such claims.

This situation emphasizes the need to thoroughly review all your assets and make sure that probate and non-probate assets are coordinated so your testamentary plan is achieved.

(2/17/15)