Handbook
• PAY-ON-DEATH DESIGNATIONS
An owner of some property can name another individual as the “beneficiary” of
that property (or whatever is left of it) when the owner passes away. This property
will also be distributed outside the Will.
A common example is an individual (“owner”) that opens a Bank Account in their
own name, and names another individual as “beneficiary”. The owner can deposit
or spend as much as he wants, or even close the Account. The beneficiary only
receives what remains, if anything, from the Account when the owner passes
away. This type of account has many names, including “pay-on-death” account,
“informal trust”, “In Trust For” account, “ITF” account and “Totten Trust” (named
after a famous case where this type of account was challenged, but where the
Court upheld its use).
These types of accounts are easy to open and with only a minimal amount of
paperwork.
This type of “pay-on-death” designation can also be used for other types of
property (e.g., retirement plans and certain government securities).
