POD/Beneficiary On Cds And Bank Accounts

  |     |   1 posts since 2024

My dad, who recently passed away, had me as sole POD or beneficiary on all his cds and bank accounts. His will says that his assets are to be divided equally among me and my 2 siblings. I know these are legally outside probate and the will but morally I need to divide these with my siblings. How do I do that other than cash them and gift them $18000 per year which only makes a small dent in them.

  |     |   209 posts since 2018
Unless you are advised otherwise by an estate planning attorney, if you really do wish to share with yours siblings, your only option is to take your POD inheritance and gift their “shares” of the proceeds to them. Please be aware that although you will then need to report the excess amounts gifted over $18,000 per person on an annual gift tax return (IRS Form 709), you will not owe gift taxes on the excess over $18,000 per person unless you have previously gifted more than the applicable annual maximums AND your aggregate cumulative annual excess gifts, including the excess amounts for these new gifts, will be (by the end of 2024) more than $13,610,000 (not a typo).
  |     |   375 posts since 2020
Okay, what do I know? Well how about take the sun you would owe the two of them, Subtract the taxes you would pay for giving them large amounts of money, then give it to each of them. For a clear conscience, adjust for the larger amount you yourself get since there is no gift on your own. I completely admire you and would do the same. I have a friend in a similar situation whose attitude was more like “tough nuts for the brother”. Sad.
  |     |   1,095 posts since 2011
You do not say who is executor of your dad's will. You do not say where the bank is located, whether local or distant. So a bunch of "ifs" follow.

If you are executor or are able to obtain cooperation of the executor, and if the bank is located such that you are able to just walk in, sit down, and speak with a decision maker there:

What I would try is to go into the bank with the necessary letter of administration, show them a copy of your dad's will, and attempt to have the bank distribute the funds in accord both with your wishes and as ordered in the will. Worst that can happen is they refuse. But I think you might have chance for your desired outcome without first taking possession of all the funds personally.

I acknowledge if some lawyer is handling this matter, all that might be more difficult. When I was executor of my dad's estate, I handled everything myself, alone. There was no lawyer involvement.
  |     |   366 posts since 2020
I can think of three options:

1.You could take the money and give it out annual as capped gifts as you suggested but since you indicate that would take longer than you would like, it may not be the best option.  Depending on how much it is, consider whether you can give it in larger gifts each year by also giving some of it to other family members.  For example, if one of the people you want it to go to is married and has kids you can also give the full amount up to the gift tax exemption annually to their spouse, to their children, etc. to multiply that $18k times the number of people you give it to.

2. You can disclaim your POD inheritance and maybe have the funds become part of the probated estate under will in which case they would be distributed according to the will. But the fees involved need to be part of that analysis (probate, professional fees, etc.)

3. You can give it out to the others all at once or on an expedited schedule. But you will then be required to file IRS 709 which will reduce your lifetime gift/estate tax exemption (which may or may not cost you additional taxes depending on your situation).

I would not recommend doing this without an attorney and a CPA. Has to be done according to IRS and state tax authority rules or you could have a problem. Also the bank isn't necessarily going to cooperate. Also a good CPA should be able to help you pick the best option for your specific situation.

Sucks you have to go through all of this just to handle your own family's money.  It's your money, but the government thinks it's theirs.
  |     |   1,324 posts since 2010
DBR, first, I am not a lawyer, so this is merely food for thoght, you can dohble check what a lawyer, and yoiu probably would need one to get this done, although it might be easier than you would think.

You should have the option to turn down your POD inheritance. With that, and a document from you, the executor of the will should be able to go to all those places and claim it for his estate subject to the will. Or, maybe the procedure is then to go to probate court and someone seek to be administrator of that part of his estae, and then distribute it according to the same terms as in the will.

Only issue with doing it as Curious Dave says is that it woulld use up YOUR lifetime exemption for gifts. That means you would be able to will or gift less of your estate in your lifetime than you would have wanted to. But you might have to spend some lawyer money now in order to keep your full lifetime exemption.
  |     |   154 posts since 2022
I would first contact the banks and find out what they would prefer to do to release funds as there is a discrepancy in your fathers wishes. Also, see if there is a way to find out the dates of when PODs were established to determine timeline of PODs and WILL and which was the last to be executed.
  |     |   366 posts since 2020
None of that is relevant. The POD supersedes the will regardless of when it was established. It's not a discrepancy they are two separate instruments. The bank will distribute the money to the POD beneficiaries regardless of what the will says. That's why you should be careful to review all of your accounts and insurance policies that have beneficiaries when you create a will or a trust to make sure that the assets will be distributed according to your wishes.
  |     |   154 posts since 2022
you may be correct on a technical level, however, I know from experience it doesn't alway work the way its supposed to. Which ends up costing money and time.
  |     |   190 posts since 2023
If a $36k gift total each year is a “small dent” you need to talk to attorney and get necessary releases too. However, your Dad could have easily put all three of you on FI documents but did not! The will covers other assets in which all share. If you had any input to dad on vesting of title at the FI then that is another big issue! Finally need to get those funds out of that FI before someone may try to freeze the accounts. You can be a nice guy later with your siblings and (hopefully) not disappoint the dearly departed! Good luck and talk to a reputable attorney (who drafted the will?) for a roadmap
  |     |   944 posts since 2017
My wife was a joint owner on all of my mother in laws account.  The lawyer said to close all the account (Her funds were in Vanguard) and put in my wife's name and me as joint. The only assets available for the estate was Metlife stock that had no beneficiary. The stock was sold and paid the lawyer and other fees. My mother in law owed a few thousand to BOA. We referred them to the lawyer who advised BOA that the estate had no funds. The debt was discharged.
  My mother in laws wishes were to split the money between her 2 siblings.  We gave my brother in law and his children gifts up to the irs limits.  The money was split after all tax and other expenses (even ones we incurred).

I suggest contacting an attorney.
 Probate can be a problem.  I'm in a relatives will that has been I  limbo since 2019.  The problem is liquidating multiple time shares and some other issues.
  |     |   17 posts since 2023
I’m amazed that stupid people contend that POD does not have priority over a will. Guess what it does! I can site numerous examples. Obviously the person in this situation wanted extra protection, but didn’t realize the situation. It happens and now they deal with it. The person who is the POD beneficiary had to be a trustworthy and should do the right thing, but they should be afforded a percentage of the estate.
  |     |   431 posts since 2020
I'd hoped someone here speaks from the basis of the Inheritance Law, but it takes a specialist.
the basis of the Investopedia makes Everyone a Speaker, but only in the Category of Reader.
10 years old with the Smartphone is a Reader nowadays!
12 years old with the Smartphone could a Investopedia Writer as far as I see it.
I see that Investopedia and similar anonymous sources are liberally using terms as Distribution, Honor, Trust and Will with no regard to actual meanings or explanations of real life implications.

I see that when Quotations without Interpretations are given as a response because of the prior Reading without Comprehension, some people could be set onto wrong and very expensive path.

Of Course an Informal Trust as POD or ITF, that is limited in in scope to Accounts/Deposits at given Financial Institution puts no Restriction or Obligation on Beneficiary. there is simply nothing in POD but the named Beneficiary, Nor Will, no Inheritance... nothing else.
However Will of Last Testament commonly contains the provisions regarding deceased person Trusts, Informal or Not, and often contains names different Beneficiaries for the entire Estate or Inherited Assets.
Those here who amazingly contest the Powers of Will would have to argue the definition of "Last".
I will not be amazed if such argument gets "Last" Wrong, because the true and undisputed LAST is the State Inheritance Law and State Probation Court.
There the powers go from Trust to Will to Law.
There are Category of "Heirs at law" and instances when Law overrides the Will and Trust is administered by Court order notwithstanding any POD or ITF Beneficiaries
IGR is not a specialist, definitely not as smart and not as real as MAGA.
IGR will not try to explain the mechanics to those who can not see the difference between legal Access and lawful Ownership, Probate and Will Execution.

@Kaight had given most comprehensive albeit incomplete response.
There is not enough information given and it imprudent to give pseudo-financial advise in such complicated mater as Trust and Inheritance.
In general, Asset distribution due to the death of the original owner is not the issue "Moral", is not the issue of "Gift" and is not the issue of "Tax" for person who executes Final Distribution... I am not saying some 1099 MISC or other IRS forms would not have to be filed.

Death is Complicated... evermore when mixed with Money.
It is very unfortunate that IGR stands to learn nothing out of this.
  |     |   431 posts since 2020
I don't think I am fully qualify...
I don't believe POD, aka Trust, supersedes the Last Testament.
If Will lists the Accounts as an Asset to be divided. all POD makes out of you is the Executor of the Estate to the limit of the Assets under your name.
I don't think it is a gift, or moral issue. I think it is pure legal.
If all heirs agree and no layers are involved you can distribute as a "gift" to every member of your siblings households. If you do Cash, each of you legally obliged to report the transaction...
Go from here, depending on you goal. Just remember, POD or any informal Trust only protect funds from going under probation. Bank has no obligation to distribute Funds to you once Banks learns about the death of the original Signer. Most if not all Financial Institutions have Policy of Freezing the Accounts until all legal mater is cleared to FI satisfaction. No bank wants to be dragged into estate fight.
  |     |   366 posts since 2020
"I don't believe POD, aka Trust, supersedes the Last Testament."

A POD account is a type of trust called an informal trust. It always supersedes a will and the assets to be distributed to the POD beneficiaries will not be treated as part of the estate under the will.
  |     |   70 posts since 2022
Agree, POD supersedes will
  |     |   7 posts since 2024
We've been dealing with 2 knowledgeable attorneys recently hired to oversee execution of a loved ones estate plan. The attorney informed the beneficiaries they could take a death certificate, a letter of instruction and their driver's license to a bank and get their portion of the funds because a POD supercedes The Last Will and Testament. Banks have different rules to accomplish this but the end result is they will release the money without the Will. If the Will contradicts the POD the bank may get their legal department involved but the attorney's response was the end result would be the same. I am neither agreeing or disagreeing with the result simply relaying my recent experience. The Letter of Instruction is not mandatory simply preferable.
  |     |   29 posts since 2018
"It is important to note that a POD is more powerful than a last will and testament. If a POD account has one individual named as the beneficiary, and the will of the account holder lists another individual as a beneficiary, the POD-designated beneficiary prevails. The named beneficiary on the POD account is not required to honor the account holder’s last will and testament, which makes it imperative that the individual ensures to change or cancel the POD beneficiary if they have someone else listed on their will."
  |     |   154 posts since 2022
you may think the POD supersedes will. If the bank doesn't think so, you're in for an expensive fight.
Been there, done that.
  |     |   190 posts since 2023
The bank does not need to know about any will, trust, etc or any other documents except the death certificate in order to move the money as the account requires
  |     |   375 posts since 2020
I believe choice 1 above is accurate.
  |     |   29 posts since 2018
What I think doesn't matter, what matters is the contents of the article I quoted! Copy & paste the link on the last line of my post. Investopedia is a highly regarded financial media website. You are free to choose whether you believe them or not.
  |     |   154 posts since 2022
Hank, I completely understand and agree. Just saying to cover your bases. We had to sue a major bank to release funds of a TOD when there was a conflicting will. Expensive.
  |     |   29 posts since 2018
@betaguy, Hopefully you sued them and were able to get a judgement to compensate you for your legal fees and punitive damages!
  |     |   154 posts since 2022
sue one of the biggest banks in the world? no, we didn't sue.
would've been $1m in legal fees for a $50k claim and still be in the courts after 6 years with no end in sight.
  |     |   70 posts since 2022
I settled my Mother’s estate 2 years ago. Her banks and life insurance companies only wanted copy of death certificate. Same with her IRA, only needed to provide death certificate.  Every account was straight forward, nothing additional required outside death certificate.
  |     |   298 posts since 2023
I also settled my Mother's estate a couple of years ago and she had CD's at 4 different banks and a small account at Fidelity. All were POD accounts and all were settled fast with death certificates.
  |     |   431 posts since 2020
I couldn't close an Account where I was Joint Owner, following the Death of the person named first on the Account! AND???
The Bank put the freeze on the account as soon as death certificate was issued to the SSN# associated with the Account! AND???
Should I give to Everyone testimonial advise to Empty out the Accounts after the Death but before Funeral?...
there was few dollars Account Balance, I cared less because I knew it'd cost m more in my time to deal with it and the Bank was out of state. Eventually I got annoyed receiving Bank Statements with on behalf of deceased person name as "pleased" monthly reminder.
I visited to bank and gave it two choices; close the account immediately, or wait for the account to become dormant and send funds to State Treasury administered Unclaimed Property Fund... the "fun" part of it, is that because the freeze on the Account the bank wouldn't even be able to collect inactivity fee!
Bank Manager overrode the freeze and closed the account.

I advise everyone not to accept Medical Treatments based on testimonial examples.

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