Payable on Death accounts, or “POD accounts” for short, have become popular for avoiding probate. I have heard some people refer to POD accounts as the “poor-man’s” estate plan; I do not agree.
It’s a common belief that estate planning means death planning. However, planning for what happens after you die is only one piece of the estate planning puzzle. It is just as important to make a plan for what happens if you become mentally incapacitated.
Comprehensive estate planning must include incapacity planning. Estate planning is about more than your legacy after death, avoiding probate, and saving on taxes. It must also be about having a plan in place to manage your affairs if you become mentally incapacitated during your life.
"I need an estate plan, can you just draft a 'Simple Will' for me?"
I've heard this request more times than I'd like to admit and it makes me cringe. It's not because I can't fulfill the request, but because the request is just wrong. Let me explain.
Having a Will is a good, making it simple is good, and knowing you need an estate plan is good. However, having a Simple Will does not mean you have an estate plan. A Will is just one of many tools used to build an estate plan. On its own, a Will is just a Will; and it only works after you pass away.