Short answer: In Indiana, payable-on-death (POD) accounts generally pass directly to the named beneficiary outside probate and are not part of the probate estate available to pay the decedent’s probate creditors. However, there are important exceptions and practical steps you must know before assuming POD funds will or will not be reached by creditors.

How POD accounts work in Indiana

A POD account is an account a bank pays to a named beneficiary automatically when the account owner dies. Because the account transfers by contract or beneficiary designation rather than by the decedent’s will or probate distribution, the funds typically avoid probate.

Because POD funds usually pass outside probate, those funds normally do not become “assets of the probate estate” that the personal representative (executor) administers. That means creditors who make claims in the probate administration usually cannot force the sale or seizure of a POD account that already transferred to a named beneficiary.

Where creditors may still reach POD funds

Although POD accounts usually avoid probate claims, creditors may be able to reach POD funds in certain situations, including:

• Fraudulent transfers: If the decedent designated a beneficiary (or changed beneficiaries) to defraud known creditors shortly before death, a court can set aside the transfer or impose a constructive trust. Claims of fraud or intent to hinder creditors can be litigated in probate or civil court.
• Federal tax liens and certain government claims: Some federal claims, including certain IRS liens, can survive death and attach to nonprobate assets in some circumstances. Consult a tax attorney for specifics.
• Joint accounts and ambiguous titling: If an account is titled as a joint account with right of survivorship rather than a true POD designation, the joint ownership language may allow different creditor or estate claims.
• Funds paid to the estate before transfer: If the bank places the funds under the control of the personal representative or the funds are deposited into the estate account, they become estate property and are subject to creditor claims.
• State statutory exceptions or family allowances: Indiana law guarantees certain allowances to a surviving spouse or family that may affect how estate assets are distributed, and in limited circumstances courts handle distribution priorities. See Indiana probate statutes for details:

For an overview of Indiana probate statutes, see Indiana Code, Title 29 (Probate): https://iga.in.gov/legislative/laws/2023/ic/titles/029. For practical information from the Indiana judiciary on probate processes, see the Indiana Courts probate page: https://www.in.gov/judiciary/probate/.

Practical examples (hypothetical)

Example 1: Decedent A has a $50,000 POD account naming B as beneficiary and separate probate assets worth $10,000. Creditors file claims against A’s probate estate. Because the $50,000 transferred by POD directly to B, the probate claims can generally be paid only from the $10,000 probate estate. B’s $50,000 is typically safe from those probate creditors unless a court finds the POD designation was fraudulent or another exception applies.

Example 2: Decedent C changes the POD beneficiary to D one week before death to avoid an existing $60,000 judgment creditor. The creditor sues and alleges the change was made to defraud creditors. A court could reverse or remedy that transfer if the creditor proves intent to hinder, delay or defraud.

What family members, fiduciaries and beneficiaries should do

1. Confirm the account title and beneficiary designation: Ask the bank for the account title and beneficiary form. A clear POD designation supports an out-of-probate transfer.
2. Do not move funds prematurely: If you are a named beneficiary, avoid withdrawing or spending funds until you understand whether any claims or liens might attach.
3. Notify the bank with the death certificate: Banks typically require a death certificate to release POD funds. If the bank mistakenly pays funds into the estate account, that can change creditor rights.
4. Check for liens and taxes: Check for federal tax liabilities or recorded liens that could affect nonprobate assets.
5. Consult a probate or creditor-rights attorney: If estate assets look insufficient to pay debts or if creditors were already pursuing the decedent, get legal advice promptly to protect rights and assess litigation risk.

When POD accounts do not relieve an estate of creditor obligations

A POD designation does not eliminate the decedent’s liability. Creditors retain the right to pursue the decedent’s estate assets that are subject to probate. If probate assets are insufficient, unsecured creditors may not be fully paid. In many cases, POD funds remain with the beneficiary and do not make creditors whole.

Alternatives and planning considerations

If your goal is to protect heirs while still addressing creditor exposure, consider these planning tools (each has pros and cons):

• Revocable or irrevocable trusts
• Joint ownership appropriately structured
• Careful timing of beneficiary changes and documentation to avoid suspicion of fraud
• Life insurance with named beneficiaries (which generally passes outside probate)

Helpful Hints

• Verify whether the account is truly POD by obtaining the bank’s beneficiary designation form.
• Gather the decedent’s bank statements, beneficiary forms, wills, and any transfer documentation.
• Do not assume POD funds automatically pay estate creditors — they usually do not, but exceptions exist.
• If you are a beneficiary, freeze large distributions until you confirm there are no liens or pending creditor claims that could attach.
• If you are a creditor, file any necessary claims in the probate proceeding and investigate whether nonprobate transfers should be challenged as fraudulent.
• Keep clear records and dates: when beneficiary designations were made and when the account owner died. Timing can matter in any dispute about intent.
• For statutory guidance and probate rules, consult Indiana Code, Title 29 (Probate): https://iga.in.gov/legislative/laws/2023/ic/titles/029.

Next steps

If you are involved with a decedent’s POD account and there are creditor concerns, consider taking these steps now:

1. Obtain the death certificate and account beneficiary form from the bank.
2. Inventory probate and nonprobate assets and outstanding debts.
3. Contact a probate attorney in Indiana to review whether the POD transfer is likely to be protected from creditor claims or vulnerable to challenge.