You can set certain financial accounts up to be payable on death (POD). This means that your own passing immediately puts the account into someone else’s name. You pick that beneficiary and assign them the control of the account in advance. You still have full control up until the moment that you pass away when the change goes into effect.
But what if you have an account like this, and you also have a will. Say that you forget that you set up the POD account and you write in your will that a different heir is supposed to get the contents of that account. Which one is going to take precedence, the will or the POD designation?
The payable on death account comes first
What is important to consider is the order in which these actions take place. Since the payable on death account transfers instantly into someone else’s name upon your passing, it leaves your estate. This bypasses your estate plan. Since the account is not part of your estate, it cannot be given out by your will, or a trust, or any other sort of financial estate planning document.
Essentially, it would mean that the will is talking about an asset that does not exist within your estate. The POD account would still be honored and the person named in the will would not get the assets that they expected. You can imagine that this leads to a lot of confusion, which is why it’s good to have everything match up in your plan.
If you want to have full control over your finances and avoid estate disputes, take the time to consider all of the options you have to create the ideal plan in advance.