Minor as POD Beneficiary?

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Question:

Can a single owner of a checking or savings account have a minor as the beneficiary of a Payable on Death designation?

Answer:

Because a POD designation creates no ownership interest in the account, there should be nothing wrong with naming a minor as the beneficiary on such an account.

In fact, this is a very common way for parents to set up savings accounts for money that "belongs" to their children.

If the owner dies before the beneficiary reaches majority, there may be a concern, depending on the type of account (checking vs. savings), the age of the minor, and the policies of the bank.

First published on BankersOnline.com 12/6/04