Other Estate Planning Matters

P.O.D. Accounts

Punts v. Wilson, 137 S.W.3d 889 (Tex. App.—Texarkana 2004, no pet.).


Decedent opened several P.O.D. accounts and designated Beneficiary as the person entitled to the funds upon his death. Decedent’s will left the remainder of his estate in equal shares to Beneficiary and Friend. Beneficiary was named as the independent executor of Decedent’s will. After Decedent died, Beneficiary made withdrawals from the P.O.D. accounts in excess of one-half of a million dollars. Beneficiary did not include these accounts in the estate inventory. Friend sued Beneficiary for breach of fiduciary duty and conversion claiming that Beneficiary’s actions deprived Friend of one-half of the funds in the accounts. The trial court granted Beneficiary’s motion for a summary judgment and Friend appealed.

The appellate court affirmed. The court explained that although Beneficiary owed fiduciary duties to Friend by virtue of being the executor of Decedent’s estate, Beneficiary owed no duties to Friend with respect to assets that are not includable in Decedent’s probate estate. Decedent properly created the P.O.D. accounts and properly named Beneficiary as the P.O.D. payee. The funds belonged to Beneficiary immediately upon Decedent’s death and were not part of Decedent’s probate estate. Prob. Code §§ 439(b) & 439A(b)(2). Consequently, Beneficiary owed no duty to Friend with respect to these funds.

The court also rejected Friend’s attempt to use extrinsic evidence to prove Decedent’s intent that Beneficiary and Friend share the funds equally. Likewise, the court deemed it insignificant that Beneficiary obtained checks payable to Beneficiary as the executor of Decedent’s estate when he withdrew the funds. Following a long line of Texas cases, the court explained that if the P.O.D. agreement is complete and unambiguous, then parol evidence is inadmissible to vary, add to, or contradict its term.

Moral: Clients must remember that multiple-party accounts such as P.O.D. accounts, trust accounts, and joint accounts with survivorship rights pass under the terms of the account contracts and not under their wills. The estate planner should carefully questions each client about the existence of multiple-party accounts, determine if they were created correctly, and whether the client actually intends the property to pass outside of the probate estate.