PAY ON DEATH ACCOUNTS IN LOUISIANA | | Legacy Center of ...

A ?Pay on Death Account,? also known as a ?Transfer on Death Account? (commonly called a P.O.D. or T.O.D. account), is an account at a financial institution that allows payment of the funds in the account to a designated person upon the death of the account holder. These accounts are common in states other than Louisiana and have been allowed in Louisiana since 1984. However, there is still much confusion regarding P.O.D. accounts among the public, financial institutions and even the court system. This article will attempt to address that confusion.

In the absence of a P.O.D. designation, funds held in bank accounts (with the exception of IRAs held at banks) pass at death to either the intestate heirs if the deceased has no will or to the legatees named in the will, if there is one. However, in 1984, Louisiana passed a law that allows a bank to pay to a beneficiary designated by the account holder the funds in the account at death of the account holder. Originally this law provided the beneficiary must be related to the account holder, but now he can name anyone as the beneficiary regardless of whether the beneficiary is related to him or not. Some, but not all, banks in Louisiana offer P.O.D. accounts to their customers. Similar laws also allow credit unions and savings and loans to also offer such accounts.

To create a P.O.D. account, the account holder must give a notarized affidavit to the financial institution naming who is to be the account beneficiary upon his death. The law also allows the bank to rely on this affidavit to disburse the funds to the beneficiary upon receiving a death certificate showing the account holder is deceased. The law further provides that the bank is not liable to the estate of the deceased or any heir of the deceased as long as they pay the account funds to the designated beneficiary. It also relieves the bank from any claims by a former or current spouse, an heir, a legatee under a will, a creditor or any other person who may have a claim to the funds. The law makes it very clear that the bank is protected from any liability from any claims by any person when they pay the funds in the P.O.D. account as authorized by the account holder.

Although this law protects the bank or financial institution when it pays a P.O.D. account, Louisiana?s substantive law on heirship was not changed by the passing of the P.O.D. law. In fact, the P.O.D. statute itself provides that it does not prohibit any right of forced heirship or the collation or collection of funds due any spouse, heir, legatee, creditor, or other person having rights or claims to funds of the deceased depositor. Therefore, it?s possible for a bank to pay the money in an account to the designated beneficiary while Louisiana?s substantive law provides that the money belongs to someone else. A common example would be a married person opening a bank account only in his or her name and depositing money earned during the marriage into that account. The account holder spouse has the right to designate someone other than their spouse as the P.O.D. beneficiary even though one-half of the money in the account belongs to their spouse according to Louisiana?s community property law. If this occurs and the account holder dies, the surviving spouse should have a claim against the beneficiary to get back their one-half of the money in the account and possibly a usufruct or right to use the other one-half in the account. The surviving spouse would not have a claim against the bank, however, as the P.O.D. statute limits the bank?s liability for payment. The same thing could occur if there are forced heirs or creditors who are entitled to estate assets.
As you can see, P.O.D. accounts have the potential to cause a great deal of confusion. Therefore, you should use extreme care when establishing P.O.D. accounts at your bank or financial institution. While there are circumstances where P.O.D. accounts may be warranted, the better practice is for you to integrate P.O.D. and other beneficiary-designated accounts into your overall estate plan. Failure to do so, may create conflict and/or litigation between the P.O.D. beneficiary and the legatees named in your will. When planning your estate, make sure you work with professionals who are familiar with all types of probate and non-probate assets to ensure your legacy will pass to your loved ones as you intend.

Ms. Melancon has engaged in the practice of law in Ascension Parish for the last fourteen years. The primary focus of her practice is estate planning, probate and elder law. For more information or to attend an upcoming estate planning seminar, call her office at 744-0027.

Serving Baton Rouge & All Parishes; the Legacy Center of Louisiana, LLC is a law firm located a few miles south of Baton Rouge, Louisiana in Prairieville. Our practice focuses on elder law, estate planning, estate administration, and probate and successions issues. The mission of the Legacy Center is to help Louisiana families have a lasting legacy - a legacy beyond the mere transmission of material wealth. We accomplish our mission by guiding our clients through the legal maze of will and trust law, Medicaid planning, VA benefits, estate tax law, and probate law. But, we do much more than that. We also share the concerns and burdens of our Elder Law clients who are caring for a loved one, counsel our estate planning clients in ways to preserve the harmony that is easily lost upon the disability or death of a loved one. In short, we strive to treat our clients in the same manner we would like to be treated. Our clients sleep well knowing their estate is legally protected through proper legal planning of living wills, trusts, and other estate planning strategies; and handled with compassion, expertise, and dedication to excellence. You will sleep well too when you know you and your family are prepared. Each area of our practice is devoted to protecting your estate and helping you to leave a lasting legacy. We can help you protect yourself in time of need and when the time comes, pass on a lasting legacy. With proper estate planning, Medicaid planning, VA benefits planning, successions and probate, and other elder law services, you can rest assured that the administration of your estate and your family will be in good hands. Coupled with our mission to help you leave a lasting legacy, is our commitment to treat each person who gives us the opportunity to assist them with the care and kindness found in our own families. We strive to treat all people with dignity, respect, and courtesy. We understand that all legacies begin with love and dreams regardless of the amount of tangible assets. While our work often involves complex legal issues, rest assured that we will not be satisfied until you understand these issues and how these issues affect you.

Source: http://legacycenterla.com/blog/pay-on-death-accounts-in-louisiana/

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