POD / TOD Accounts are NOT the Answer
Having "Payable on Death" or "Transfer on Death" Bank Accounts Wouldn't Fix Prince's Estate — Or Yours!
The articles and commentary are endless about the fact that Prince did not have a Will even though he was reportedly worth zillions of dollars and had serious “health issues” (at least issues considered serious by his attorney, according to a recent news article).
One article “You might not have Prince’s ‘Pop Life' — but you should have a will" in The Washington Post summarized what the author called “a few basic steps to take no matter how much your estate may be worth.”
The article presents a good overview of what everyone should consider (a Will, a financial plan, a meeting with your loved ones about your financial assets). But I was troubled by the author’s suggestion that one can avoid probate by preparing a Transfer on Death form (or having the actual property title re-done). In my experience, a Transfer on Death / Payable on Death (commonly known as a TOD or POD) account is an excellent way to really screw up an otherwise well planned estate plan.
For example, assume you have around $50,000 in a bank account and you anticipate that this account will be available to pay your final debts, the cost of your funeral and perhaps finance the transfer of your assets through probate. If you indicate, whether by re-titling or filling out a form, that you want the asset to be “transferred on death” to another person then, guess what: That “another person” will be the owner of that asset, which may not be your wish.
This is just another reason why it is important to discuss your estate plan with an attorney whose primary practice is in this area of the law. The attorney should go over with you how all your assets are titled and you should advise the attorney whether any of those assets have a “TOD or POD” directive. This is very important.