Estate Question (For After the Rush)

[JohnH]

If a POD beneficiary receives the balance in an account and there is accrued interest which was earned while the owner was still living, is the beneficiary supposed to pay the interest back into the estate or do they simply keep it?

For example, if a $10,000 cd pays interest semi-annually at 3% and the owner of the cd dies on July 5 and the POD beneficiary has the cd paid out to them on July 15, then the POD beneficiary will be paid roughly $10,150. Is the POD beneficiary supposed to pay the $150 (earned & accrued while the owner was living) back to the estate, or is there some other way it is supposed to be treated?

[Burke]

If the account was POD, the beneficiary gets everything that was in the account which would include any interest that might have been credited. POD's go directly to the named recipient outside the probate estate. However, the interest paid and credited (not accrued) prior to DOD will go on the decedent's final 1040 tax return next year, and the interest paid and credited to the account after the DOD will go on the bene's.