Joint Tenancy, Paid on Death (POD) and Transfer on Death (TOD) Designations

You may have thought that adding a child as a joint tenant on your home or paid-on-death beneficiary of an account would be a good idea in order to avoid the probate process when you die… but did you know that how you title your home and bank accounts could also have a dramatic and unintended effect on your estate planning?


Here’s an example:  John and Mary create mirror wills that leave their home and bank accounts to their four children in equal shares.  They appoint their oldest son, Robert, to be the personal representative under both their wills.   John and Mary also decide to add their son, Robert, as a joint tenant on the deed to their home and they also added Robert as a paid on death beneficiary of all their jointly held bank accounts. John dies, then Mary dies.  Even though John and Mary wanted their children to inherit all their property in equal shares, legally Robert now owns everything.  This is not the result that John and Mary wanted.

Joint Tenancy:

 “Joint Tenancy” is a way for two or more people to share ownership of real estate or other property. When one of the owners of the property dies, the share of that owner in the property automatically transfers to the surviving owner(s).  This automatic transfer attribute of joint tenancy is called “the right of survivorship”.  Many people do not realize that the right of survivorship trumps alternate designations in wills or trusts.   Therefore, in the example above, John and Mary’s written desires in their wills take a back seat to the designation of Robert as a joint tenant.  In other words, Robert’s ownership as a joint tenant trumps contrary directions in John and Mary’s Wills.

Paid on Death Designations:

Similarly, “Paid on Death (POD)” or “Transfer on Death (TOD)” designations on bank accounts also trump alternative directions in wills and trusts.  A bank is contractually obligated to pay to the order of whom the account owner designates as beneficiary of those funds upon death of the account owner.  In the example above, John and Mary’s bank was contractually obligated to pay Robert the balance of funds in his parent(s)’ accounts upon their death.

What should John and Mary have done?

An elder law attorney would have alerted John and Mary to the conflict that their beneficiary designations created.  By allowing the titled property to go through the probate process, their intentions under their wills would have taken effect.  Additionally, a properly funded joint or individual family trust could have avoided probate and ensured that their assets would have been divided equally among their children.