By Dan Wyde
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April 18, 2023
D id you know that in the State of Texas there exists the possibility of a bank not paying out to beneficiaries who are designated on the account's signature card for an account listed as a " Payable On Death " (POD)? Our firm has handled such situations as they rare, and they don't fall under a testamentary asset - meaning that they are not subject to the probate courts. Recommending that clients convert their regular checking and savings accounts to have a POD designation often is used in estate planning , but this converts a testamentary asset into one of the few non-testamentary assets like a term life insurance policy. Several sections of the Texas Estates Code apply here including: Section 113.52 Rights Of Creditors Section 113.04 Types Of Accounts Many others Upon the death of the account holder, the named beneficiary(ies) should receive the remaining funds in the account subject to Texas regulations. So why would the named beneficiary not get access to the funds, especially if there is no lawsuit from other family members or creditors? One of the ways this may happen is when the signature card was signed, dated, and had the named beneficiary(ies) with the payable on death account designation at a bank which later was acquired. While the acquiring bank should have safeg0uards to ensure that the most recent signature card is properly reflected in their computer systems, the ultimate factor is the actual signature card itself. Older account holders may have signed a physical signature card at the original bank, and then they never signed a new signature card (another physical card or digitally) with the new banking institution. Another concern some people have with POD accounts is that the decedent may have named the checking/saving account's beneficiaries in one's Last Will & Testament; but the signature card on file with the bank has a different beneficiary. Since the POD-designated account no longer is a testamentary asset, thus not subject to probate, then this can cause challenges between parties who expect to receive the remaining funds. A bank also may not follow its own steps for checking a signature card before disbursing funds to the incorrect party. Banks in Texas have a step-by-step process which must be followed for POD account fund disbursement. Any missteps in this process can cause significant problems and alter the wishes of the decent as listed on his/her original signature card. This is a complex situation due to the checking/savings account, traditionally considered an estate asset and therefore subject to probate, when the exact same checking/savings account instead has the payable on death designation. Our lawyers can help you with these kinds of confusing situations and other similar estate-related, and other non-testamentary asset-related, situations. Contact us today to schedule your consultation.