Short answer: Payable-on-death (POD) accounts generally pass directly to the named beneficiary outside of probate in California, so they are not ordinarily distributed as part of the probate estate. However, creditors may still be able to reach POD funds in certain situations—for example, if the transfer was a fraudulent attempt to avoid creditors, if the account contains community property or estate assets, or if state law or a court orders otherwise. This article explains how POD accounts work in California, when creditors can make claims, and practical steps to protect both creditors’ and beneficiaries’ interests.

What a POD account is and how it typically works

A payable-on-death (POD) account is a bank account that names a beneficiary who will receive the money when the account owner dies. The key features:

• The account owner retains full control during life (can withdraw, change the beneficiary, or close the account).
• On the owner’s death, the bank pays the named beneficiary directly, without distribution through probate.
• Because POD transfers usually occur outside probate, the funds are not assets of the probate estate for the purpose of distributing assets under a will.

For general information about probate and nonprobate transfers in California, see the California Probate Code on the state legislature website: California Probate Code.

When creditors can reach POD funds in California

Even though POD accounts pass outside probate, California law and court decisions recognize circumstances where creditors can pursue those funds. Common scenarios include:

• Fraudulent transfer: If the decedent transferred or designated a beneficiary for the purpose of defeating, delaying, or hindering creditors, a creditor may challenge and seek to set aside the transfer under California’s fraudulent transfer law. See California’s Uniform Voidable Transactions (fraudulent transfer) provisions: Cal. Civ. Code § 3439.
• Funds that are community property or estate property: If the account contains community property (for example, funds deposited during marriage) or if the decedent’s estate can be shown to have a property interest in the account, a creditor with a valid claim against the estate or the surviving spouse may have rights to those funds.
• Interpleader, garnishment, or turnover orders: A bank may be ordered by a court to hold or turnover funds, or a creditor may file a lawsuit against the beneficiary (or the bank) to obtain those funds.
• When a beneficiary is also a debtor of the decedent: If the beneficiary owes money to the decedent’s creditors or is the subject of competing claims, a court may resolve those claims in litigation, including ordering turnover of POD proceeds.
• Small estate and probate claim procedures: If the estate is opened for probate and a creditor timely files a valid claim against the estate, that may affect how other assets are treated in practice, and a court could consider broader equitable relief where appropriate.

In short, POD status does not create an absolute shield from creditor claims. Creditors frequently must take additional legal steps—such as bringing a fraudulent transfer claim or seeking a turnover order—to attempt to access POD funds.

Practical examples (hypotheticals)

• Example A (no creditor reach): Mary names her adult child as POD beneficiary on a small checking account. Mary dies with probate assets sufficient to pay creditors. Because the POD funds transfer directly to the child and were not fraudulently transferred, creditors are paid from probate assets and the child keeps the POD account balance.
• Example B (fraud challenge): John moved most of his savings into a POD account naming a friend shortly before creditors obtained a judgment. A creditor sues, alleging John made the transfer to avoid payment. If the court finds the transfer fraudulent under California law, the creditor could have the transfer set aside and collect from the funds.
• Example C (community property): A bank account titled in the decedent’s name but funded largely with community property may give the surviving spouse or creditors different rights. Community property rules and the account’s funding history matter.

What beneficiaries and personal representatives should do right away

1. Do not spend or move POD funds immediately on receipt when there are known creditor claims or pending probate. Doing so can create exposure if those funds later are ordered turned over.
2. Gather documentation: account titles, beneficiary designations, account statements showing who deposited funds and when, and any communications about changes to beneficiaries.
3. If an estate has been opened, make sure creditors receive notice and allow them to file claims as required by probate procedures. California Courts offers self-help information on probate: California Courts — Probate Self-Help.
4. If you are a creditor and believe a POD transfer was designed to evade payment, consider discussing a fraudulent transfer action with counsel (see Cal. Civ. Code § 3439).
5. Consult a probate or creditor’s rights attorney before taking action. A lawyer can advise whether to file an action, how to compel turnover, or how to protect a beneficiary’s receipt.

How banks typically handle POD accounts on a death

Banks rely on the beneficiary designation and a death certificate. Many banks will pay the named beneficiary after seeing a certified copy of the death certificate and proper identification. Where there is a dispute or a court order, banks may hold funds until the dispute is resolved or may file an interpleader action to ask the court to decide competing claims.

When to involve a lawyer

Consider getting legal advice if any of these are true:

• There are known or likely creditor claims against the decedent’s estate.
• You suspect the POD designation was made to hide assets from creditors.
• The account contains significant funds or complex ownership history (e.g., community property, gifts from others, or joint tenancy issues).
• Multiple people claim the same funds (competing beneficiary designations, claims by estate vs. beneficiary, etc.).

Helpful hints

• Confirm the account title and beneficiary designation in writing. The precise wording matters.
• Track deposit history. Who deposited the money and when can change whether funds are considered community, separate, or estate property.
• Keep POD funds intact until you know there are no competing claims or until an attorney advises otherwise.
• If you are a creditor, act promptly. There are time limits and procedural steps to preserve claims against an estate or to pursue equitable relief.
• Remember alternatives to POD accounts for leaving assets to someone, such as trusts, which have different creditor and tax consequences.
• Use official resources: California Probate Code (legislature website) and California Courts’ probate self-help pages are good starting points: leginfo.legislature.ca.gov — Probate Code, courts.ca.gov — Probate Self-Help.