Posted by Before the American Life Insurance GuideColumnPoint out that when we die, our property, according to the law,There are only 4 ways to pass on,they are, respectively:
- Probate procedure
- Statutory authorization
- Trust
- contract
In real life, if our assets are only cash deposits, and we hope to leave this money to our children or pass it on to other beneficiaries, what is the simplest way?How much will it cost?
The answer may be unexpected:Go to the bank, or log in to online banking and set up a beneficiary to complete the configuration of all cash wealth transfer and inheritance.No need to spend a penny for the whole process.
This way of setting up beneficiaries to complete wealth inheritance is the POD beneficiary account.
Is the POD beneficiary account a trust?
The short answer is yes.
The POD beneficiary trust, called Payable on Death (POD), is a legal agreement that appoints the beneficiary of the funds in our account. It is also called "Savings account trust"or"Torton Trust. "
The beneficiary of the account can be one person, multiple people, companies, other trusts, or other institutions.
Advantages of POD beneficiary account inheritance
The advantages of this kind of cash wealth inheritance are very obvious, mainly concentrated in three aspects:
1. Simplicity is its biggest feature
2. The amount of accounts is not limited
3. No-cost trust
4. Control
Before his death, the account owner always maintained the control of the funds and can modify them at any time; after his death, the funds are also prevented from entering the probate procedure, and there is no need to go through the process of the estate certification court, which improves the efficiency of fund circulation; , The process for the beneficiary of the account to claim the money to the bank is also simple and clear:You can claim the right of control by issuing a death certificate of your family to the bank.
(>>>Recommended reading:Column | In addition to wills and trusts, how to leave property to children and family members, or designate beneficiaries?)
Disadvantages of POD beneficiary account inheritance
Having said so many advantages, the following are the disadvantages of this kind of savings trust:
1. Unable to deal with the situation where the beneficiary dies first
2. Only applicable to the inheritance of cash assets deposited in the bank
3. Groups with large cash deposits need to consider the issue of hedging inheritance tax
Regarding the second point, "more cash deposits",How much cash is too much?What is the standard?Should it be called inheritance tax?
We have listed one of the issues that the Chinese community is most concerned about as follows:
Do foreigners (Chinese) have to pay inheritance tax on cash deposits in the United States?Will it be included in the total alien estate tax of 6?
Q: Do foreigners have to pay inheritance tax for personal cash deposits in checking accounts and saving accounts in US banks?
A: No.Inheritance tax will not be calculated.
(>>>Recommended reading:Biden's campaign platform has the greatest impact on whose wealth?)
However, since the foreigner's assets may not be limited to cash deposits in U.S. banking institutions, if theChinese, bought a house in the United States, jewelry, cars and other assets, worth more than 6 yuan, then you need to pay this inheritance tax.
In addition, in the actual claim process of savings trust beneficiaries, someState with inheritance tax, It will first confirm that there are enough funds in the estate to pay the debts before the bank will transfer it to the beneficiary.
therefore,We need a solution to cover this cost.
A solution
In this process, one of the simplest solutions is life insurance.It may play an important role in your wealth inheritance and estate planning portfolio.
Life insurance is a U.S. asset not considered subject to gift and estate taxes.For non-resident aliens, assets are also excluded from estate tax.
Q: Do foreigners have to pay inheritance tax on asset-based life insurance policies in the United States?
A: No.Inheritance tax will not be calculated.
Life insurance claims become the beneficiary’s income, and this income is also tax-free for the beneficiary*.
The beneficiary can freely dispose of the life insurance claims to pay for inheritance tax issues that may be encountered.
POD Savings Account Trust FAQ
For common questions about setting up a POD savings trust in a bank, pleaseClick Here Refer to the official instructions of Bank of America. This FAQ will help you answer the following questions:
- What is a POD beneficiary?
- Who can become a POD beneficiary?
- Can I have multiple POD beneficiaries?
- What kind of account can be set up as a beneficiary?
- What if the beneficiary dies first?
When setting up a POD beneficiary, please confirm with the bank in advance the specific conditions and requirements of the beneficiary's claim of account funds. (End of full text)
(>>>Related reading: Q&A｜Can American life insurance beneficiaries write themselves?Can you write friends? Live Record of 11 Common Beneficiary Questions ）
appendix
*. "Gifts & Inheritances.", IRS, 01.26.2020.
*. "Topic No. 409 Capital Gains and Losses.", IRS, IRS, 01.26.2020.
*. "Estate Tax." IRS, 01.26.2020.
*. "Frequently Asked Questions on Gift Taxes." IRS, 01.26.2020.
*. "Does Your State Have an Estate or Inheritance Tax?", Tax Foundation., 10.16.2019.
*. US Code § 101, "Certain death benefits", there are exceptions to this regulation.
