Detailed answer

What a POD account is: A POD account (sometimes called a Totten trust or beneficiary‑designated account) is a bank account that names a specific beneficiary to receive the balance when the account owner dies. The account generally passes directly to the named beneficiary outside probate.

General rule in Maryland: Because POD accounts transfer directly to the named beneficiary on death, they normally are not part of the decedent’s probate estate. That means creditors who make claims against the probate estate typically cannot collect from a POD account that passed directly to a third‑party beneficiary.

Maryland courts and probate practice distinguish probate assets from nonprobate transfers such as beneficiary designations and POD accounts. For practical guidance from the Maryland Judiciary about nonprobate transfers and creditors, see Maryland Courts — Probate: Nonprobate Transfers and Creditor Claims: https://www.mdcourts.gov/legalhelp/probate/nonprobate and https://www.mdcourts.gov/legalhelp/probate/creditors.

Important exceptions and situations where creditors may still reach POD funds:

• If the beneficiary is the decedent’s estate: If the POD designation names the estate (or the decedent’s estate is the beneficiary), the funds become probate property and are available to pay creditors.
• If the account was a joint account rather than a true POD: Joint accounts with rights of survivorship can be treated differently. If the surviving co‑owner is effectively a cosigner or the decedent’s asset was placed in a joint account to defeat creditors, a court may bring the funds into the estate.
• Fraudulent transfers or transfers made to hinder creditors: If the decedent made the POD designation (or converted assets to POD status) to hide assets or to fraudulently avoid known creditors, Maryland law allows remedies for creditors. Creditors can pursue claims or seek to set aside transfers where a court finds they were made with intent to hinder, delay, or defraud creditors. For state legislative resources, see the Maryland General Assembly site: https://mgaleg.maryland.gov
• Administrative freezes and bank procedures: Banks may freeze POD accounts after death until the beneficiary presents required documentation (death certificate, beneficiary ID, and bank forms). A freeze can delay distribution; it does not itself make the funds available to estate creditors unless a court orders otherwise.
• Statutory exceptions for specific creditor categories: Certain obligations (for example, some taxes or government claims) may have different collection routes. Check with counsel for particular creditor types.

What happens if probate assets don’t cover creditor claims?

If the probate estate’s assets are insufficient to pay creditors, creditors can only collect from estate property. They generally cannot force a beneficiary to use funds that passed outside probate (such as a properly designated POD) to pay the decedent’s debts, unless one of the exceptions above applies. So if the only remaining funds are in a POD payable to a third‑party beneficiary, creditors usually cannot seize those funds directly from the beneficiary through the probate process.

Practical examples (hypotheticals):

• Hypothetical A: Decedent named a child as POD beneficiary for a bank account. The probate estate has insufficient cash to pay funeral bills and other creditor claims. Because the account passed by POD to the child outside probate, creditors generally cannot demand that the child turn over those funds to satisfy the decedent’s probate creditors.
• Hypothetical B: Decedent changed a large account to POD in the months before death after receiving notice of a big creditor claim. A creditor sues to set aside the transfer as fraudulent. A Maryland court could look at the timing and purpose of the transfer and potentially recover the funds for creditors if it finds intent to hinder or defraud.
• Hypothetical C: POD beneficiary is listed as the decedent’s “estate.” In this case, the account becomes probate property and should be used to pay valid creditors in order of priority under Maryland probate rules.

What beneficiaries and personal representatives should do:

1. Do not automatically spend or distribute POD funds until you confirm any outstanding creditor claims and the account’s legal status.
2. Get copies of the bank’s account agreement and the beneficiary designation form to confirm the exact wording.
3. If you are a personal representative, identify and inventory all assets—probate and nonprobate—and provide notices required by Maryland probate procedures. See Maryland Courts probate resources: https://www.mdcourts.gov/legalhelp/probate.
4. If you suspect a transfer was made to defeat creditors, consult an attorney promptly. Creditor litigation can require quick action and produces time limits for claims and defenses.
5. Consider opening a small estate or formal estate administration if appropriate; an attorney can help you determine which path is cost‑effective.

When to consult a Maryland attorney: If creditors claim entitlement to POD funds, if a transfer occurred shortly before death, if the beneficiary is a bank or the estate, or if there are disputes among survivors, you should consult a Maryland probate attorney. An attorney can evaluate whether Maryland’s rules on nonprobate transfers, joint accounts, or fraudulent transfer remedies might allow creditors to reach those funds.

Helpful Hints

• Confirm who is named as beneficiary on bank records; handwritten or outdated forms can create disputes.
• If you are the named beneficiary, keep the death certificate and the bank’s required paperwork ready; banks often require an original or certified copy of the death certificate to release funds.
• Don’t commingle POD funds with your personal funds before you’re sure no legitimate claims attach to them.
• If the estate is insolvent, the personal representative must follow Maryland priority rules for paying creditors; nonprobate assets usually are not part of that calculation unless an exception applies.
• Document timing. Transfers made shortly before death raise more risk that a court could set them aside as fraudulent.
• Use Maryland Judiciary resources to learn about creditor notices and probate steps: https://www.mdcourts.gov/legalhelp/probate/creditors and https://www.mdcourts.gov/legalhelp/probate.