POD and TOD accounts skip probate but can't handle incapacity or complex situations like minor beneficiaries or real estate. A revocable trust lets a successor trustee take over if you become incapacitated and gives you control over how assets go to people with special needs, creditor problems, or substance-abuse issues.
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? 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. 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. If the beneficiary has creditor issues or mental health issues or substance abuse issues, the trust can have solutions for all of those things. Trust can provide for long-term management of assets, and it also can provide who will receive that share if the beneficiary is no longer alive. And if you own a home, in most states you definitely need a trust so that you can convey title after your death.
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