What Is a Payable-on-Death Account?

• A payable-on-death account is a special type of trust that becomes payable to the beneficiary upon your death. Prior to your death, you own the trust and the funds in it; you can deposit as much money into the account as you wish and can change the terms of the account. Once you die, your beneficiary is given ownership of the account. Payable-on-death accounts do not have to go through probate.
  
  

What if My Beneficiary Is Underage?

• If the beneficiary is underage, she still gets ownership of the account upon your death, but whether she can access it before she comes of age depends on bank policies. Thus, you may want to set up the account so that a guardian must access the funds and give them to the minor until she comes of age. You must set up the guardianship yourself; the guardian cannot do so after your death.
  
  

What if I Don't Name a Guardian?

• If you don't name a guardian, then the process for accessing funds is completely up to the bank. Some banks have no policies in place regarding accounts for minors, in which case your beneficiary could access the funds whenever he wanted. Other banks require a guardian and may have a procedure for appointing one after your death. If you have appointed a guardian for your minor but not added his name to the bank account, the guardian cannot add his own name on your behalf after your death.
  
  

How Do I Set Up a Payable-on-Death Account?

• Visit your bank to set up a payable-on-death account. You need the name and Social Security number of your beneficiary as well as funds to put into the account. Your bank manager can set up the account for you and add the beneficiary's name to it. Once the account is set up, you can change beneficiaries if you change your mind or life events necessitate a change.