Be Aware to Whom You Bequeath Your Nest Egg

My father’s will named me executor and divided his estate equally among my brother, my sister, and me. So I was surprised to find he had a bank certificate of deposit payable on death (POD) to me alone. None of his other accounts was POD. Someone at the bank probably suggested he use the POD designation as a way of avoiding probate. Dad did not hear well, and he may have just nodded when the bank employee made the suggestion. I knew very well, however, that my father did not intend to give this CD only to me. But by using a POD instrument, that’s precisely what he did. Unlike his other property, the CD was not subject to probate.

I would have been within my rights to pocket the money—with or without the knowledge of my brother and sister. They could have then gone to court, arguing that a mistake had been made—that my father lacked the required intent to make a gift of the entire CD to me. That’s the truth of the matter, yet it would have been almost impossible to prove.

Instead, I cashed in the CD and gave one-third of the proceeds each to my brother and sister. We’re a close family, so the decision was automatic, but I’m sure Dad didn’t buy that CD because he was counting on me to be fair and share the money—he just made a mistake. Beware of this kind of situation; the potential for a family feud is obvious.

From “AARP Crash Course in Estate Planning: The Essential Guide to Wills, Trusts and Your Personal Legacy,” by Michael T. Palermo, JD, CFP, 2005, pp. 20-21.