Most banks and credit unions allow you to name payable-on-death (POD) beneficiaries on your accounts. Last month I reviewed my experience as a beneficiary claiming POD bank CDs. As I described in that post, having beneficiaries on your bank accounts can make it much easier on your heirs. When the owner dies, the account doesn't have to go through the probate process. This can save your heirs time and legal expenses. The beneficiary can claim the account directly at the bank or credit union.
Unfortunately, not all banks and credit unions allow POD beneficiaries on accounts. I know this is a deal killer for several readers so I thought it would be a good idea to highlight these institutions. If you know of others, please leave a comment.
ING Direct is one of the institutions that doesn't allow POD beneficiaries. I recently emailed ING Direct about this hoping that they may have changed. Unfortunately, they have not. Here is the reply I received:
At this time, we don't offer beneficiary, payable on death or custodial accounts. You may title an account in your own name only or in the name of yourself and a joint holder. You may also choose to register your deposit account as a living trust account. If you don't already have a Revocable Living Trust, you should contact a legal or financial advisor before you consider getting one.
ING Direct has more information about a living trust in its OSA product info section:
A living trust is a formal revocable trust that is typically set up by an Attorney, in which the owner (also known as a grantor) specifies who will receive the trust assets when the owner passes away. The owner of the trust has control of the trust assets during his or her lifetime and can change or revoke the trust at any time.
Another institution that doesn't allow POD beneficiaries is Digital Credit Union. This all-access credit union has become better known lately due to its very competitive CDs. A reader was attracted to the CDs but learned that DCU doesn't have a provision for beneficiaries. I did some searching, and found the following in DCU's Q&A section:
How do I add a beneficiary to a savings or certificate account?
Beneficiaries can be added to accounts only if they are held under a trust membership. Personal accounts are ineligible. For more information on trusts, please select here.
Neither ING Direct nor DCU make it simple for customers to specify beneficiaries. You first have to set up a trust which typically requires an attorney. If you are considering a trust, I don't have any experience in this, but a reader provided a useful comment in my beneficiary post which described some of the pros and cons of using living trusts as opposed to depending on PODs and a will.
It would be interesting to know the reasons why ING Direct and DCU have decided not to allow POD beneficiaries. I know ING Direct has received many complaints about this over the last decade. Some institutions have listened to their customers and added the capability of allowing POD beneficiaries. One example is SmartyPig. When they first launched, PODs were not an option. SmartyPig made the change to allow PODs in 2010.
Do you know of any other bank or credit union that doesn't allow POD beneficiaries?