Let’s say granny wanted to avoid probate and also keep her FDIC insurance exposure low and ran around to fifty banks buying CD’s and names children and grandchildren as pay on death beneficiaries of each account. There is no will and no probate of her estate and no executor qualified.
So, one of the POD beneficiaries figures out that granny was maybe worth over $5 Million and there is a necessity to file an estate tax return.
So he goes to Head in the Sand Credit Union and asks for details of any CD’s owned by the decedent and even gets his siblings to give him a notarized permission to find out the information in the accounts.
HITSCU says, “no way” we cannot accept that permission slip and we have to follow our own procedures and protect their privacy.
This little cautionary tale, points out the problem with pay on death accounts. Yes, they avoid probate, but they also create a mess in trying to locate the decedent’s assets when there may be an estate tax due. In such situations a revocable trust is more beneficial as the owner and provides more centralized control of the assets if granny wants to avoid probate.