Using a payable on death account can be an effective way to ensure that assets get to your beneficiary without having to go through the probate process. This type of account is available at most banks and it immediately pays out the money in your account to your beneficiary when you die.
When you set up a payable on death account, the bank will require you to name a beneficiary. The beneficiary is the individual who will receive the money in your account when you die. You may name one of your family members or a friend as your account beneficiary. With this type of account, you can also update the beneficiary and change it as needed. For example, if one of your beneficiaries dies before you do, you can change the beneficiary to someone else.
When you name a beneficiary for your account, the bank will require you to provide contact information for that individual. Once you die, the bank will contact the beneficiary to let her know she is entitled to the money in the account. At that point, the bank and the beneficiary can discuss payment arrangements. The method that the bank uses to pay the money can vary depending on the rules of the bank.
After you die and the bank contacts the beneficiary of your account, the beneficiary can choose a few different ways to be paid. In many cases, the bank will simply write a check for the amount in the account. Depending on the account balance, the bank might also be able to provide cash to the beneficiary of the account. The bank may also be able to transfer the money to another bank account for the beneficiary.
When you set up a payable on death account, you have the option of naming multiple beneficiaries for the account. For example, you could leave the account to your two children. When you use this option, the money in the account can be split equally or you can designate the percentages you want each beneficiary to receive.