Also known as: payment on death arrangement · POD contractual arrangement · payable-on-death · POD designation
Written by attorneys · grounded in primary & secondary sources — see below
A contractual mechanism by which the owner of an account designates one or more beneficiaries to receive the sums on deposit upon the owner's death. The designation is created by the terms of the account itself and requires no probate proceeding. A beneficiary acquires no interest in the account during the owner's lifetime.
Pavel Petrov opened a savings account at a credit union and named his daughter Phoebe Park as the payable-on-death beneficiary on the signature card. After Pavel died, the credit union paid the balance directly to Phoebe. The payment bypassed Pavel's estate and any will he had executed.
Ralph H. Heck named his daughter Deborah J. Archer as beneficiary on four POD accounts. After his death, his son Ralph D. Heck sued to impose a constructive trust, alleging undue influence and fraud. The court examined whether the POD designations could be set aside on equitable grounds despite the contractual form.
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No. A beneficiary in an account with a POD designation has no right to the sums on deposit during the lifetime of any party. The owner retains full control and may change the designation or withdraw the funds at any time.
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Divorce revokes the POD designation to a former spouse by operation of law unless the divorce decree or a separate contract expressly preserves the designation. The funds then pass as part of the decedent's estate rather than to the former spouse.
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No. A will cannot dispose of nonprobate property such as sums held in a POD account. The contractual beneficiary designation controls regardless of contrary language in the will.
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No. A POD designation in a multiple-party account without right of survivorship is ineffective. The sums pass as part of the decedent's estate rather than to the named beneficiary.
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