You might even say estate planning is Biblical, as the Bible encourages good stewardship of the resources God has provided. Planning ahead for financial and other matters, such as whether you want to retire to an independent living community, is good stewardship.

Whether you've already engaged in estate planning or you're just starting the process, you may have heard about POD accounts. While we're not legal or financial advisors — and you should definitely work with one of those for estate planning — we gathered some information about POD accounts that older adults should know.

What Are POD Accounts?

POD accounts are payable-on-death accounts. These are financial assets that are transferred to the named beneficiary upon death. Typically, someone has to provide a death certificate to trigger the transfer of these types of assets.

Here's a quick breakdown of how it works:

• You set up the POD account and name a beneficiary or multiple beneficiaries using a beneficiary form.
• When you pass away, the beneficiary or beneficiaries present the death certificate and complete any forms necessary to claim their assets.
• The financial institution cuts a check or transfers assets into a new account for the beneficiary or beneficiaries.

What Types of Accounts Can Be Payable on Death?

Numerous account types can be payable on death, including:

• Bank accounts like checking, savings, money market and CD accounts
• Retirement accounts, including IRAs and 401(k)s
• Investment accounts, including stocks and securities or brokerage accounts

The Benefits of POD Accounts

The main benefit of a POD account is that it removes your assets from any otherwise necessary probate process. Your beneficiaries don't have to go through the court to have money transferred to them, which typically means they can get the funds a lot faster. That may be important if they need funds for support or to cover the cost of bills related to your estate.

Another benefit of POD accounts is that they can reduce the costs of estate management. Probate is a court process; when assets must go through probate, you'll pay court costs and often, attorney's fees. POD processes are typically free of charge, but heirs may need to pay a small fee for notarized documents in some cases.

What Older Adults Need to Know About POD Accounts

Often, when you read about the benefits of POD accounts, they're positioned as almost immediately providing your beneficiaries with assets. That's a bit misleading, and it's important to understand the actual process.

First, beneficiaries will need a death certificate to have POD accounts transferred. On average, it takes 2 to 4 weeks to receive a death certificate. Until that time, assets in POD accounts may be unavailable to beneficiaries.

Once the death certificate is provided, asset transfer may not be immediate. Every financial institution has its own rules and processes. Most do require beneficiaries to submit the death certificate as well as other documentation, including a claim form or proof of identity. These documents may need to go through validation with the financial institution. In some cases, it can take a few weeks from submission of documents to transfer of assets.

In short: Don't expect the funds to be immediately available to beneficiaries to cover urgent costs like funeral fees. If you're relying on POD accounts to transfer funds but also need money to be immediately available for such purposes, you might consider adding a trusted person — such as an adult child — to a bank account so they can use it to cover urgent costs before initiating POD processes.

A second consideration is that not all POD accounts transfer the same way. Banks typically issue checks or wire transfers once the POD processes are complete. But if you have funds in a tax-deferred account, such as an IRA, a provisional IRA may be created for your beneficiary. They'll need to disburse the funds from that account over the course of a period of time — typically 10 years — and pay taxes on them.

An Important Part of Your Estate Planning

POD accounts can be a critical part of estate planning. They help you ensure beneficiaries and heirs can avoid expensive and frustrating probate processes. However, simply because funds are payable on death doesn't mean your loved ones have immediate access to money in your accounts. Plan ahead, and expect POD accounts to take a few weeks to a couple of months to resolve.

You don't need millions of dollars in assets for a will and basic estate planning to make sense. If you haven't already thought about these topics, now's a great time. You can start by contacting your financial institution and completing a beneficiary form to ensure your POD accounts transfer to the right people in the future.

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