Payable on Death Clause

A Payable on Death Clause (POD clause) is a provision in a financial account or instrument that designates a specific beneficiary to receive the funds or assets upon the account holder’s death, without the need for probate.

When an account holder establishes a POD clause, they retain full control over the account during their lifetime. The designated beneficiary does not have any rights to the funds until the account holder passes away. Upon the death of the account holder, the designated beneficiary can claim the assets directly from the financial institution by providing a death certificate, effectively bypassing the probate process.

An example of a Payable on Death Clause is often used in bank accounts or certificates of deposit. For instance, if an individual names their child as the POD beneficiary on their savings account, the child will automatically receive the assets in that account upon the parent’s death, avoiding delays and costs associated with probate.

In the context of Texas, including Houston and surrounding areas, using a Payable on Death Clause can be a strategic element in estate planning, as it helps simplify the transfer of assets and can minimize the administrative burden for beneficiaries. It’s important to ensure that the designation is clear and updated, as changes in relationships or circumstances may necessitate adjustments to the beneficiaries named in the POD clause.