"POD" stands for "payable on death," and it refers to one way in which you can designate who gets your stuff after you die, without the assets going through the probate process. Not all assets give you the option to name a POD beneficiary, but you certainly can use one for your U.S. Savings Bonds.
Naming a POD beneficiary on your bond means that the bond will go directly to that person at your death, rather than passing through probate. Probate is the legal process of distributing your assets after you die. For example, if you leave a will and distribute your assets that way, those assets go through probate. Avoiding probate by naming a POD beneficiary is generally a much faster and cheaper process, and helps you ensure the bonds go exactly where you want them to go.
Transfer at Death
At the original owner's death, the POD beneficiary takes ownership of the bond and can then either cash it out or hold it until it matures. If you inherit a U.S. Savings Bond as the POD beneficiary, it can be reissued in your name. But, to do so, you need to complete a form from the U.S. Treasury, "Request to Reissue United States Savings Bonds," and submit it with a death certificate for the decedent to prove you're the new rightful owner.
No Present Effect
Designating someone as the POD beneficiary on your bond does not affect their rights to the bond or any proceeds from it until you die. For example, say that you name your son as the POD beneficiary. As long as you're alive, he can't cash in the bond and he has no rights to any interest or principal payments. Plus, you're allowed to change the POD beneficiary any time you want, so if you decide you'd rather that someone else be the beneficiary, you still retain the right to change it.
Just because the bond with the POD passes outside of probate doesn't mean it's exempt from estate taxes -- if your estate is affected by estate taxes. For example, say you have savings bonds worth $50,000 and name your daughter as the POD beneficiary. If your estate must file an estate tax return, that $50,000 is still included. Of course, the exemption as of 2013 allows you to pass up to $5,250,000 in taxable gifts during your life and any unused portion is left for your estate, so only the very wealthy are affected by the estate tax.
- Nolo: How Beneficiaries Can Claim Payable-on-Death Assets
- U.S. Treasury: Redemption and Reissue Instructions for Surviving Registrant
- Justice Law: Perils of PODs
- Pension Benefit Guarantee Corporation. "Designate a Beneficiary." Accessed July 8, 2020.
- Insurance Information Institute."What Is a Beneficiary?" Accessed July 8, 2020.
- United States Office of Personnel Management. "Life Insurance: Designating a Beneficiary." Accessed July 8, 2020.
- Securian Financial. "Naming a Life Insurance Beneficiary." Accessed July 8, 2020.
- Haven Life. "How to Name a Child as a Life Insurance Beneficiary." Accessed July 8, 2020.
- U.S. Department of Veterans Affairs. "Life Insurance: Designation of Beneficiaries Who Are Minors." Accessed July 8, 2020.
- Social Security Administration. "Types Of Beneficiaries." Accessed July 8, 2020.
- Fidelity. "Settling the Estate: Probate." Accessed July 8, 2020.
- United Way. "What Is a Beneficiary Designation?" Accessed July 8, 2020.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."