Jerry Taylor explains why payable-on-death accounts aren't enough for most people. POD designations skip probate but offer no protection if you become incapacitated and can't handle minors or beneficiaries with creditor problems. A revocable living trust costs more upfront but lets a successor trustee manage your affairs and protects vulnerable beneficiaries.
Chapters
Jerry, why in the world do I need to get an expensive trust when all I have to do is get a payable-on-death beneficiary put on my accounts? You lawyers are just trying to find a way to make money. I've heard that from thousands of you. You know who you are. Payable-on-death and transfer-on-death accounts allow you to name beneficiaries so that when you die, everything in that account goes to the beneficiary outside of probate. For some people, these types of accounts are fine, but these types of accounts do have significant limitations, and that means for many people, a revocable trust is much better. Let me tell you why. A trust allows you to plan for incapacity. If something were to happen to you and you couldn't take care of your affairs, the successor trustee could step in and manage all the accounts in the trust on your behalf. A trust allows you to plan for all kinds of beneficiaries, which a POD account or a TOD account does not do. For instance, minors. If a minor gets the money, the trust will have solutions for that. If the beneficiary is a special needs person, the trust will have solutions for that where the POD account does not. If the beneficiary has creditor issues or mental health issues or substance abuse issues,
