A payable-on-death account is a bank account that is titled to the original owner but that directs distribution of its funds to a beneficiary upon the owner’s death. As long as the creator of the account is alive, the beneficiary of the account has no access to the funds within it. This way, if someone ever needs the money in the account or changes their mind, they can spend the money, choose a different beneficiary or close the account. Individuals often opt for payable-on-death accounts because they are fairly easy to create, there is no limit on the amount you can leave to the beneficiary of the account, it is free to designate a beneficiary and it allows the asset to transfer to the designated beneficiary at the account holder’s death without first going through probate court.
