What Does it Mean if a Bank Account Says POD?

Video Transcript

"There are new things out there in the banking world called PODs. And a POD is payable on death. There's also a thing out there called TOD, which means transfer on death. A TOD is going to be more on a stock account, a POD is going to be more on a bank account. POD and TOD mean that when the owner of the account passes away, the money automatically goes to whoever it's designated to go to. Now the cool thing about that is that none of the money goes through probate. That's very cool. The problem with it is, though, that in your will--or you may have a revocable living trust--you've got a lot of provisions in there that will say how they get it, when they get it. We may be able to save taxes on that money--estate taxes. And if it's just payable to an individual, no taxes will be saved on that money. You may lose an opportunity to really cut back on the amount the IRS is going to get if you do a POD or you do a TOD and it's not done for the right reasons. Go see a qualified lawyer."