POD Accounts

If a person is named pay on death (POD) beneficiary of an account wants to divide the money in the account between people not named, will there be a gift tax? The person named POD is the Executor.

POD or pay on death account is an account, such as a bank account, the title (ownership) of which provides that on death of the primary account owner, the assets transfer automatically to the named survivor. For example, "Jane Doe, POD Timmy Doe". On Jane's death the account would pass to Timmy. If Timmy could disclaim the account (by filing a disclaimer or renunciation with the local probate court) the account may pass as if Timmy died before Jane. That may be one way to alter the distribution of the POD account in your situation, but disclaimers require the assistance of a competent probate attorney and meeting strict deadline and other requirements. If the disclaimer approach is not available (or won't work) to get the assets to the people you want, then the POD beneficiary can make gifts each year up to the annual exclusion amount to the people he or she wanted to benefit. In 2007 that amount is $12,000/per person/per year. So if its a large amount of money it may take a number of years to move the funds to those to be benefited. A consultation with a probate attorney might be sufficient to help get you on the right path.