Illinois Law and POD Accounts

Helen W. Gunnarsson (Highland Park, Illinois attorney and writer) has recently published her article entitled POD and TOD accounts and your estate-planning arsenal, 95 Est. Plan. Ill. B.J. 510 (Oct. 2007).

Here is an excerpt from her article:

POD and TOD beneficiary designations, like joint tenancy and living trusts, are another tool for avoiding probate of property. It couldn’t be easier to set up a bank or brokerage account, or a security registration, in POD or TOD status: bank and brokerage clerks understand what they are and, lawyers report, sometimes even suggest them to their clients. Those clerks will also happily help clients set up or convert their accounts at no cost to include POD or TOD beneficiaries.

Unlike joint tenancy, the designation of a POD or TOD beneficiary has no effect on ownership until the owner’s death. 815 ILCS 10/6. Under the Trust and Payable on Death Accounts Act, any holder may at any time cancel or change the designation of beneficiary without the knowledge or consent of the other holders or the beneficiaries. 205 ILCS 625/4(a). Under the Uniform TOD Security Registration Act, the sole owner or all currently surviving owners of a security may cancel or change the property’s registration in beneficiary form at any time without the beneficiary’s knowledge or consent. 815 ILCS 10/6.

The Trust and Payable on Death Accounts Act applies to bank, savings and loan, and credit union accounts. 205 ILCS 625/2. The Uniform TOD Security Registration Act applies to securities and security accounts, both of which the statute defines.