Financial Vehicles Triggered by Death

An individual’s death often generates a need for spouses, families, and businesses to rearrange their finances; triggering a spouse’s need for survivor income or required estate liquidity.  Fortunately, there are financial vehicles to help with these challenges.  Below are some of these features and their benefits:

• Death Puts. Also called a survivor option, the death put is an optional redemption feature on a corporate bond allowing the estate of the deceased to put (sell) the bond back to the issuer at par value in the event of the owner’s death.  This can generate a secure stream of income. 
• POD Bank Accounts. A payable-on-death (POD) account is an individual bank account that avoids probate.  The account owner designates beneficiaries to receive the proceeds of the account upon the owner’s death. 
• Immediate Annuity Refund. This provides an income that the annuitant cannot outlive.  An insurer will pay an income based on the individual life being measured.  
• Deferred Annuity Death Benefits. A deferred annuity is an annuity that builds up value currently, with the intention of paying out income in the future. 

See Steve Parrish, Financial Features to Die For, Forbes, Oct. 13, 2014.