A POD account passes money directly to a named person when you die, without going through probate

POD stands for "payable on death." It is a bank account—usually a savings or money market account—that you set up with a named beneficiary. When you die, the money in that account goes directly to the person you named, bypassing the probate process entirely. The bank handles the transfer once it receives a death certificate; your beneficiary does not have to wait for a court to settle your estate or compete with creditors for the funds.

You keep full control of the account while you are alive. You can withdraw money, close it, or change the beneficiary at any time without telling the person you named. The beneficiary has no claim to the money and no access to the account unless you die.

Key Takeaways

  • A POD account transfers its balance directly to your named beneficiary when you die, without probate delays or court involvement.
  • You retain complete control of the account during your lifetime and can change the beneficiary or withdraw funds whenever you choose.
  • The beneficiary receives the money tax-free (though the account itself may be subject to federal estate tax if your total estate is large enough).
  • Most banks offer POD designations on savings accounts, money market accounts, and certificates of deposit, but not on checking accounts.
  • If your named beneficiary dies before you do, the money reverts to your estate and goes through probate unless you name a backup beneficiary.

How to set up a POD account at your bank

When you open a new savings or money market account, ask the bank whether it offers POD designations. Most do. You will fill out a form that asks for the beneficiary's full legal name, date of birth, and Social Security number. Some banks call this a "transfer on death" or TOD form; the terms are interchangeable.

If you already have an account, call your bank or visit a branch and ask to add a POD beneficiary. There is usually no fee. The bank will update your account records, and the designation takes effect immediately. You do not need to tell your beneficiary, and you do not need a lawyer or notary.

You can name more than one beneficiary. If you do, specify how the money should be split—for example, 50% to your daughter and 50% to your son. If you do not specify percentages, most banks will split the balance equally among all named beneficiaries.

What happens to the money when you die

When you die, your beneficiary contacts the bank with a death certificate and a form of identification. The bank verifies the death and transfers the account balance to the beneficiary. This usually takes one to two weeks, though some banks move faster. The money does not sit in probate court; it does not go through your will; and creditors cannot touch it (with rare exceptions, such as unpaid federal taxes).

The beneficiary receives the full account balance tax-free. However, if your total estate—including the POD account—exceeds the federal estate tax threshold (which is very high and changes yearly), your estate may owe federal estate tax. This is uncommon for most people. Your beneficiary should check with a tax professional if your estate is large.

POD accounts versus joint accounts and wills

A POD account is different from a joint account. With a joint account, the other person has access to the money while you are alive and can withdraw it without your permission. With a POD account, only you can touch the money until you die. A joint account also passes to the surviving owner outside of probate, but it exposes your money to the other person's creditors and divorce proceedings.

A POD account is also simpler than a will. A will must go through probate, which can take months or years and costs money in court fees and attorney fees. A POD account bypasses all of that. However, a will covers assets that do not have a beneficiary designation—such as real estate, vehicles, or personal property. Most people use both: a POD account for liquid savings and a will for everything else.

What happens if your beneficiary dies before you

If the person you named as beneficiary dies before you do, the POD designation becomes void. The money does not automatically go to their heirs. Instead, it becomes part of your estate and goes through probate when you die, unless you have named a backup beneficiary.

Many banks allow you to name a contingent or secondary beneficiary—someone who receives the money if your primary beneficiary has already died. When you set up the account, ask whether the bank offers this option and name a backup. If you do not, update your beneficiary designation as soon as possible after your primary beneficiary dies.

Which accounts can have POD designations

Most banks offer POD designations on savings accounts, money market accounts, and certificates of deposit (CDs). Checking accounts typically cannot have POD designations because they are meant for frequent transactions. Credit unions often offer POD designations as well, and the rules are the same.

Some banks may charge a small fee to add or change a POD beneficiary, but most do not. Ask your bank about its policy before you open the account. If you already have an account and want to add a POD designation, there should be no charge to do so.

State laws and POD accounts

POD accounts are legal in all 50 states, but the exact rules vary slightly by state. Some states call them "transfer on death" accounts; others use "payable on death." The mechanics are the same everywhere: the money passes to your named beneficiary outside of probate.

A few states have additional rules about how much notice the bank must give to creditors or whether certain creditors can claim the funds. These situations are rare and usually involve unpaid taxes or court judgments. Your bank can tell you whether your state has any special rules that affect your account.

Frequently Asked Questions

Can I change or remove the POD beneficiary after I set it up?

Yes. You can change the beneficiary, add a new one, or remove the designation entirely at any time while you are alive. Contact your bank and ask to update your beneficiary form. The change takes effect immediately. You do not need permission from the current beneficiary.

Does the beneficiary pay taxes on the money they receive?

No. The beneficiary receives the account balance tax-free. However, if the account earned interest before you died, that interest may be subject to income tax on your final tax return. Your beneficiary should not owe income tax on the transfer itself.

Can creditors take money from a POD account?

Generally, no. Once you die, creditors cannot claim money in a POD account because it passes directly to the beneficiary outside of your estate. The exception is unpaid federal taxes or court judgments against you personally. These are rare and usually require the creditor to take legal action.

What if I want to leave money to multiple people?

You can name multiple beneficiaries on a single POD account. Tell the bank how to split the money—for example, 25% each to four people. If you do not specify percentages, the bank will divide the balance equally. You can also open separate POD accounts with different beneficiaries if you want more control over who gets what.

Is a POD account the same as a trust?

No. A POD account is simpler and requires no paperwork beyond a form at your bank. A trust is a legal document that can control how money is used after you die and can cover multiple assets. A POD account is a good option for straightforward situations; a trust is better if you have complex wishes or minor children who need a guardian for the money.