Money Matters: Estate planning advice for couple worried about taxes

Q. We have a POD clause on our savings and checking accounts and a TOD on our brokerage accounts. We did this to make funds immediately available to our two children upon our death. Now we are wondering what the tax consequences of this action might be. (Will they be subject to a gift tax for amounts over $14,000 or will the amounts be added to the estate total, etc.) We didn’t check per stirpes because we weren’t sure what that meant. If we want to gift some money now to our children how much can we gift without presenting them with a tax liability? Hope you can help us sort through this. A. Just so other readers know what we are talking about, the forms you are referring to allow the assets in the accounts to pass to the named beneficiaries and these designations take precedence over any estate plans established by will or trust. A POD, or payable on death, form is used for accounts held at financial institutions such savings and CDs. For brokerage accounts you would use a TOD, or transfer on death, form. The assets transferred via a POD or TOD are usually non-probate transfers. If your accounts are held jointly, the named beneficiaries are entitled to the assets upon the death of the last surviving account holder. These are very useful forms but you need to be careful that they fit into your overall estate plan. A discussion about how these forms impact […]