How to Handle a Payable-On-Death Bank Account as an Executor or Beneficiary

If you are assuming the role of an estate executor, you have a lot of different tasks to deal with. One of these includes dealing with payable-on-death bank accounts. Many descendants will have certain bank accounts or investments with a payable-on-death designation. Once the owner passes away, the executor may be tasked with assisting the beneficiary in this regard. Learn how this process works according to estate law.

Defining the Executor's Role

As the executor, it is important to recognize that payable-on-death accounts are not affected by a will. Therefore, these accounts are really not part of the probate estate at all. In this sense, it's really not the executor's job to make sure the funds are claimed. In reality, the beneficiary should make the attempt to secure the funds.

Despite this, as the executor you may still have some obligations related to the payable-on-death account. For one, you may be required to notify the beneficiaries that these accounts exist. This is because the executor is most likely to have access to the decedent's banking information and the status of accounts. It is not uncommon for many beneficiaries to be totally unaware of the fact that they are listed on such accounts. Therefore, some sort of notice by the executor may be required depending on the estate law in the jurisdiction.

Executors can actually provide some help to beneficiaries. In most cases, the executor will already be working with the financial institution that holds the account. In this sense, the executor can help facilitate the communication process between the beneficiary and the bank. This will keep things moving forward in the quickest manner possible.

What Beneficiaries Should Do?

What if you are not the executor but rather a beneficiary of a payable-on-death account? If you are already aware of your beneficiary status, there is nothing preventing you from claiming the money. However, you will have to go through the bank's procedures to get it done. This may include presenting your identification, a copy of the death certificate and any other applicable paperwork. The bank can then carry out the rest of the process with you outside of the probate court proceedings.

Beneficiaries and CDs

With certificates of deposit, beneficiaries actually have a few different options. Clearly, the beneficiary can decide to cash out the deposit without a penalty for the premature withdrawal. A beneficiary can also leave the funds in the account until the maturation date occurs. This will allow the beneficiary to take full advantage of the accruing interest. Finally, it may be possible to convert the CD into the beneficiary's own name.

When Issues Arise

Settling a payable-on-death account seems simple, but its complications do occur from time to time. In some jurisdictions, a problem may arise when a clause in the will contradicts the account's designation. In addition, accounts that name several beneficiaries can lead to conflict. If you find yourself in this situation, it is important to speak to an estate lawyer for assistance.

Here, at the TR Spencer Law Office, we represent clients in a wide range of estate law issues. Peruse our website for more information by visiting trspencer.com.