Payable-on-death account

When a person opens or changes a bank account, they must be told about the option of making it a payable on death or “POD” account. A POD account allows an account holder to designate one or more beneficiaries to get any remaining account funds when the account holder dies. POD accounts are especially beneficial for low-income Texans because the cost of obtaining the account funds through probate is often more than the amount in the account.

The 84th Legislature increased account holders' awareness of the availability of a Payable on Death Account option by improving how information about POD accounts must be presented to potential account holders.

Starting September 1, 2015, banks must make the account holder aware of the POD option before they select or make changes to an account. The POD information must be provided separately from other account documents and in a clear format as described in the law.

When the POD form created by the Texas Legislature is used, account holders must initial each paragraph of the disclosure form that notifies account holders about creating a POD account. If a bank creates its own POD disclosure form, the disclosures must be made before the account holder selects the type of account they want and be separated out from any other account information in 14-point bold-faced type.

Additionally, if account discussions take place primarily in a language other than English, the disclosures must be provided in that language. Finally, the bank is required to notify the customer of the type of account selected.