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What is a Pay on Death Account?

A pay on death (POD) account allows a person to pass money to family or loved ones without the necessity of probate when he or she dies. The issue with pay on death accounts is that there is no asset protection for the beneficiary. Meaning, if after the death of the owner, a beneficiary files for bankruptcy or has creditors after him/her, the beneficiary runs the risk of losing their POD inheritance because there is no protection. After the account is transferred to a beneficiary, the POD account is owned by the beneficiary and there is no legal protection. Thus, a creditor can garnish the account.

A living trust is a far mechanism to protect beneficiaries from creditors. A beneficiary should inherit an account through a trust, so that there is asset protection and his/her inheritance cannot be accessed by any potential creditor. Contact Celaya Law so our experienced attorneys can evaluate your assets and income to determine what is at risk of collection from a creditor. We can help develop a plan to protect your beneficiaries from losing their inheritance from potential creditors.

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