POD Funeral Plans
There are many different ways to pre-plan a funeral, ranging from funeral insurance policies and fully arranging all the details to pre-paid packages that cover your entire funeral costs. All of these options come with their own pros and cons, and choosing which one is right for you can take a little bit of advance research.
One of the less common options is to have a POD account (Payable on Death) set up for the beneficiary of your choosing.
What is a POD?
A POD account is basically a savings account that becomes available to your beneficiary on the date of your death. In its most simple form, you simply add a beneficiary to existing bank accounts or financial assets (stocks, bonds, mutual funds, trusts, etc.).
More complicated POD accounts might include stipulations for funeral payments or other restrictions. You can also opt to have several different POD accounts, which allow you to bestow varying funds on your beneficiaries (including one specifically for funeral planning needs).
In all cases, the money is transferred to the eligible beneficiary without the need to go through probate, that lengthy period of time when an estate is tied up and not available to finance the immediate funeral planning needs. You also typically have the right to change your plans at any time, so that if you decide you want to take an alternate funeral planning route (or change your beneficiary), it’s fairly easy to cancel your POD account.
Setting up POD Accounts
Most POD accounts will need to go through a financial advisor, probate lawyer, or other estate planning professional. Because the primary purposes is to avoid probate or other contracts that tie your funeral planning funds to a specific funeral home, it’s best to follow the appropriate legal channels so that no unexpected restrictions occur.
Drawbacks of a POD
It’s also a good idea to look over the negative sides of a POD account, as well. Additional costs associated with service fees and inheritance taxes do apply, so it may not be the most cost-effective way to set up your financial affairs. You might also need to set restrictions on how the POD funds are used to avoid a beneficiary taking the money and not applying it toward your funeral.
If you have any concerns, you can set up a POD payable to a specific funeral home or the executor to your will. These plans should always be made with everyone involved having a say in the outcome so that there are no surprises when it comes time to set the funeral plans into action.