Bank can't pounce on CD when Mom dies

Dear Dr. Don,
How do I make sure the bank does not acquire my mother's CDs when she dies? What steps or documents need to be in place?
-- Anthony Actions

Dear Anthony,
What makes you think the bank is lurking, waiting for your mom to pass, so it can swoop in and acquire her deposits? It's never the bank's money. An inactive account will, after a period of time, be transferred to the state's unclaimed property accounts -- not to the bank's coffers. Account fees could allow the bank to nibble at the balance, but that's not typical with a CD.

One way to allay your concerns is to have her make the account(s) payable on death, or POD, to a named beneficiary. However, the bank may not let your mother change the CD to a POD account in the middle of the CD's term. She may have to do it when she reinvests the maturing CD. You'll find additional details in an earlier column, "Who can make CD beneficiary changes?"

An advantage to POD accounts is the account doesn't have to go through probate. There are downsides to this approach, too, like having assets pass outside of the provisions in her will. Having the accounts named in her will is, of course, another way for your mother to ensure her wishes are met concerning the transfer of assets after her death.

Ask the adviser

Bankrate's content, including the guidance of its advice-and-expert columns and this Web site, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

 Create a news alert for "CDs"