We all hope to have someone help us in our old age. Many of us might also plan to thank that caregiver by leaving them a larger gift than originally intended. Rather than redo an entire estate plan, however, some people turn to the easy and inexpensive option of making a caregiver the beneficiary of a particular account (such as savings) using a payable on death (P.O.D.) designation.
Unfortunately, a P.O.D. account is especially vulnerable to attack by the people who otherwise would’ve received the account. They often claim “undue influence”—that the caregiver wrongly influenced the account owner’s decision. Even worse, Wisconsin law doesn’t allow the caregiver to testify about the owner’s actual reasons for the designation.
If you’re going to use a P.O.D. designation to thank a caregiver, the most important thing to remember is to document your reasons. That means making your intent clear to third parties, because you won’t be around to testify and your caregiver can’t.
The easiest way to do this is to discuss your decision and your reasons with your attorney. That addresses two issues: 1) Your attorney can testify (if necessary) about what you intended and 2) Your attorney can make sure the P.O.D. designation doesn’t conflict with or undo the rest of your estate plan. It’s also a good idea to discuss your reasons with other third parties who could testify, like a financial planner or friend.
After discussing your reasons, make sure to carefully document them and identify who you discussed them with. Put the document somewhere it can be easily found (like an estate plan folder). The more evidence you have the more likely the P.O.D. designation will stand and the less likely your other beneficiaries will challenge it.