If you wonder how to manage your Maryland estate, you have many options. Recently, many people are attempting to rush through the estate planning process by setting up taxable on death accounts. However, you might want to take a second look at everything revocable trusts offer.
What do TOD and POD accounts accomplish?
Whether you open a taxable on death (TOD) or a payable on death (POD) account, these accounts allow people to leave behind assets to their loved ones. A TOD account allows you to leave assets like stocks, bonds, or similar assets to a beneficiary. On the other hand, a POD account helps with the distribution of cash as opposed to bonds or stocks.
What revocable trusts offer
On paper, a TOD account can sound like the perfect way to take care of estate planning. Unfortunately, there are a few drawbacks to choosing these accounts. For one, neither TOD nor POD accounts have incapacitation plans in place. If incapacitation occurs to owners of revocable trusts, named successors can step in to help take care of matters.
Revocable trusts are also helpful if your beneficiaries are minors or have special needs. In either of the previously mentioned situations, it’s not uncommon for trust owners to want control of how those beneficiaries receive their inheritances. Fortunately, revocable trusts give their owners the power to manage distributed assets over long periods.
As you can see, both TOD accounts and POD accounts can help with estate planning. However, revocable trusts often make the estate planning process easier for both you and your beneficiaries. Plus, revocable trusts also help handle paying off their owners’ debts, taxes and other expenses before beneficiaries receive their assets.