Answer:
You describe a scenario something like this: John Smith owes your bank $1,000 and is in default. You've discovered that the same John Smith is a Pay on Death beneficiary on a $50,000 savings account owned by his aunt, Penelope Bigbucks. You would like to set off Smith's debt against the savings account.
Nice idea, but it won't fly! A Pay on Death (POD) beneficiary (or the beneficiary of a Totten trust account in some states) has no legal claim on the funds in the account unless and until the owner of the account (Aunt Penelope) dies. The owner can revoke or change the beneficiary designation at will before his or her death. Since Smith has no ownership interest in the account, you'll have to find another way to collect the delinquent debt.
First published on BankersOnline.com 11/22/10
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