A special bank account commonly known as a Totten Trust in California is the subject of this article. This is a simple and effective method of avoiding probate, which is also known as a bank account payable on death (POD). A POD account is basically a bank account for which you name a beneficiary, who inherits the funds in the account after your death. The budget crisis now plaguing the California Courts for the past several years has caused long delays in obtaining a hearing date, so avoiding the time and expense of probate court proceedings is vital.
Appointing a beneficiary using this particular method will have no consequences while they are alive. The beneficiary is not entitled to the money during his lifetime. This means that the beneficiary cannot withdraw any money and that the money is not considered an asset of the beneficiary if the beneficiary gets divorced, accumulates debt and is sued by creditors or files for bankruptcy.
POD accounts are widely used for the simple reason that they provide an easy way to transfer money at the time of death without the hassle and expense of lengthy probate court proceedings. Setting up a POD account or converting an existing checking or savings account to a POD account involves completing some documents provided by the bank, naming the beneficiary of the POD. Documents should be turned over to the bank, so that the bank has a record of who the beneficiary is.
You can close the account, withdraw some or all of the funds, or name a different beneficiary at any time. The money in the account is not protected from your creditors; it is like any other bank account.
It’s that easy. After his death, the beneficiary simply goes to the bank and collects the funds in the account. In California there is a short waiting period of 40 calendar days before a bank releases funds, but no probate proceedings are required. Generally, all that most banks require is evidence of death, such as a certified copy of the death certificate and proof of the identity of the beneficiary. Banks have been doing this for years and are very familiar with the process, as they are the ones that provide the forms on which the owners designate their beneficiaries. Most credit unions are also familiar with this process.
This is a relatively simple method of avoiding probate court time and expenses that are not used properly.
