Can payable-on-death (POD) accounts be used to pay estate creditors?

Short answer: In Ohio, payable-on-death (POD) accounts normally pass directly to the named beneficiary and do not go through probate. That means they are typically not part of the probate estate that an appointed executor or administrator uses to pay the decedent’s creditors. However, there are important exceptions and practical steps creditors, beneficiaries, and family members should know about.

Detailed answer — how POD accounts work in Ohio and when creditors can reach them

What is a POD account?

A POD (payable-on-death) account is a bank account where the owner names one or more beneficiaries who will receive the money automatically when the owner dies. The designation lets funds transfer outside of probate directly to the beneficiary named on the account.

General rule: POD funds pass outside probate

Because POD funds transfer by contract or designation and not by the decedent’s will or probate distribution, they usually are not part of the probate estate. That means a probate court’s normal inventory of estate assets does not include POD funds and, in many cases, creditors of the decedent cannot collect directly from those funds through the probate process.

Key exceptions and situations where creditors can still get to POD funds

• Fraudulent transfers or transfers made to avoid known creditors: If a transfer to a POD beneficiary was made to hide assets from creditors or to defeat legal obligations, a court can unwind or set aside that transfer under Ohio’s fraudulent-transfer laws. See Ohio’s Uniform Fraudulent Transfer Act: Ohio Rev. Code Chapter 1336 (for reference: https://codes.ohio.gov/ohio-revised-code/chapter/1336).
• Claims against the beneficiary for improper conduct: If the beneficiary colluded with the decedent to hide assets or otherwise engaged in wrongdoing, a creditor may have remedies against the beneficiary or the transferred funds.
• Funds treated as estate property because of account form: If an account labeled POD is in fact a joint account with rights of survivorship, or if the decedent was not the true owner when they named the beneficiary (for example, the decedent added a beneficiary but also removed other necessary formalities), a court may treat the funds as estate property subject to creditors. The exact analysis depends on account documents and the facts.
• Claims outside probate: Some creditors may have non‑probate remedies — for example, a secured creditor may assert a lien on property independent of probate, or a creditor may pursue a beneficiary personally for restitution in limited circumstances.
• State-specific statutory claims against nonprobate transfers: Ohio law provides the statutory framework for presenting and proving creditor claims against a decedent’s estate; review Ohio Rev. Code Chapter 2113 for claim procedures and related provisions (https://codes.ohio.gov/ohio-revised-code/chapter/2113). Whether these provisions allow recovery from nonprobate transfers depends on the facts and applicable court decisions.

Practical bank procedures and timing

Banks will generally require a certified copy of the death certificate and proof of the beneficiary’s identity and may place a hold while they review the account documents. Financial institutions follow their contract terms and state rules when releasing POD funds to the beneficiary. If a creditor presents a valid court order or levy, a bank may be required to hold or turn over funds depending on the order’s scope and timing.

How courts decide disputes over POD funds

When a creditor or an estate representative challenges a POD designation, Ohio courts examine:

• The account agreement and bank signature card;
• Timing and purpose of the beneficiary designation;
• Whether the transfer was made to defraud creditors;
• Whether the account was genuinely separate from the estate (versus joint ownership or a sham transfer).

If the court finds a transfer was improper, it may order the beneficiary to return some or all of the funds so creditors can be paid.

When POD funds can help pay estate creditors

POD funds may be used to pay estate creditors in these situations:

• If the beneficiary chooses to use or voluntarily turns over funds to satisfy the decedent’s debts.
• If a court orders the beneficiary to return funds because the transfer was fraudulent or otherwise invalid.
• If factual or contractual analysis shows the account actually belongs to the probate estate (for example, account titled in a way that creates an estate interest).

What to do next — steps for beneficiaries, family members, and creditors

1. Do not move or dissipate funds impulsively. If you are a beneficiary, avoid spending money that may later be subject to a claim.
2. Gather documentation: account statements, beneficiary forms, the decedent’s will (if any), and the death certificate.
3. If you are a creditor, present your claim through the probate process when appropriate and preserve any evidence of the debt and attempts to collect.
4. Contact the bank to learn what paperwork they require and whether the account is frozen or released.
5. Talk to an attorney experienced in Ohio probate and creditor-debtor law if there is a dispute or if significant assets are involved.

Where to look in Ohio law

Helpful statutory references (for orientation):

• Ohio Rev. Code Chapter 2113 — Creditor claims and probate procedures: https://codes.ohio.gov/ohio-revised-code/chapter/2113
• Ohio Rev. Code Chapter 1336 — Uniform Fraudulent Transfer Act (fraudulent transfers): https://codes.ohio.gov/ohio-revised-code/chapter/1336

Helpful Hints

• Understand the difference: probate assets vs. nonprobate (POD) assets. POD typically bypasses probate.
• Document everything. Keep copies of beneficiary designation forms and account agreements.
• If you suspect a transfer was made to block creditors, save evidence of timing (when beneficiary was named) and communications.
• Contact the bank promptly. Banks often have set procedures and will tell you what they require to release funds.
• Act quickly. If you are a creditor, you should preserve rights by timely presenting claims and pursuing remedies; if you are a beneficiary, don’t spend funds until you know whether they might be subject to a claim.
• When in doubt, consult a probate or creditor’s rights attorney in Ohio. The facts determine whether a POD account is safe from estate creditors.

Disclaimer: This article explains general principles of Ohio law and is for informational purposes only. It is not legal advice and does not create an attorney-client relationship. For guidance tailored to your situation, contact a licensed Ohio attorney.