The distribution of assets often leads to disputes after someone passes away. Their estate plan should instruct beneficiaries and descendants, but some of them may decide to challenge that plan. For instance, a beneficiary may claim that an elderly parent was manipulated through undue influence or that the copy of the will being presented is a forgery.
However, putting assets in a will is certainly not the only way to transfer them to the next generation. One alternative could be using a payable-on-death (POD) account. Would this still be at risk of a challenge from other beneficiaries?
A POD account leaves the estate
No, a POD account typically cannot be challenged. To set up this account, a person has to pick a beneficiary in advance, and that beneficiary then becomes the account owner when they pass away. They are given access as if they were the person who opened the bank account initially.
What this means is that, as soon as the original account holder passes away, the POD account leaves their estate. It becomes the property of the noted beneficiary. Since this skips the probate process, there’s no way for anyone else to challenge that beneficiary designation. In fact, reducing the likelihood of an estate dispute is one reason that people will sometimes use a POD account.
Your legal options
Things get very complicated with disputes and asset distribution. A POD account may streamline part of the process, but even it does not guarantee there will not be a challenge or a dispute. Those involved must understand the legal options they have and what steps to take moving forward.