Yes, you can name a beneficiary on most bank accounts, and it bypasses probate when you die
Most banks let you name a payable-on-death (POD) beneficiary or transfer-on-death (TOD) beneficiary on checking and savings accounts. When you die, the money in that account goes directly to the person you named—it does not go through your will or probate court. The beneficiary has no access to the account while you are alive, and you can change or remove them at any time.
Not every bank calls this the same thing. Some use "POD," others use "TOD," and a few use "in trust for" or "ITF." The mechanics are the same: you fill out a form, name the person, and the bank records it. The account stays in your name alone until your death.
This is different from making someone a joint owner. A joint owner can withdraw money right now. A beneficiary cannot touch the account until you die and they show the bank a death certificate.
Key Takeaways
- You can name a payable-on-death beneficiary on most checking and savings accounts without changing who owns or controls the account.
- The beneficiary receives the money directly after your death without going through probate, which can save time and money.
- You can name multiple beneficiaries and decide what percentage each one receives, though rules vary by bank.
- Naming a beneficiary does not affect your will or override it—the account passes outside probate regardless of what your will says.
- You can change or remove a beneficiary at any time while you are alive by contacting your bank and filling out a new form.
How to set up a beneficiary on your account
Contact your bank and ask to add a payable-on-death beneficiary. Most banks have a form you fill out in person, by mail, or online. You will need the beneficiary's full legal name and usually their Social Security number or date of birth so the bank can identify them correctly.
Some banks let you name more than one beneficiary. If you do, you can specify a percentage for each person—for example, 50 percent to your spouse and 25 percent each to two adult children. If you do not specify percentages, most banks split the money equally among all beneficiaries you named.
The form becomes part of your account records. Keep a copy for yourself. There is no cost to add a beneficiary, and it does not change your account number or how you use the account day to day.
What happens when you die
When you pass away, your beneficiary (or their executor or heir, if they have also died) contacts the bank with a death certificate. The bank verifies the certificate, confirms the beneficiary's identity, and transfers the money. This usually takes one to three weeks, though it can be faster if the bank has all the paperwork in order.
The beneficiary does not need a lawyer or court order. They do not have to wait for probate to finish. The money is theirs to withdraw or transfer as soon as the bank processes the request.
If you name a beneficiary but also leave that account to someone else in your will, the beneficiary designation wins. The account goes to the person you named on the form, not to whoever your will says should get it. This is why it matters to keep your beneficiary information up to date.
Naming a minor as beneficiary
You can name a child as a beneficiary, but there is a catch: a minor cannot legally receive or control a large sum of money on their own. When the child reaches the age of majority (usually 18 or 21, depending on your state), the bank will release the money to them directly.
If you want an adult to manage the money for the child until they are older, you have two options. First, you can name a custodian or guardian in your will and let probate handle it—but that defeats the purpose of a POD account. Second, you can name an adult as beneficiary and trust them to use the money for the child's benefit, though this has no legal force.
A better approach is to set up a trust and name the trust as the beneficiary of the account. The trust can specify an age at which the child receives the money and who manages it until then. This requires more paperwork upfront but gives you much more control over what happens to the money.
Beneficiaries and taxes
Naming a beneficiary does not create a tax problem for you while you are alive. The account is still yours, and you report all interest and earnings on your tax return as usual.
When you die, the beneficiary does not owe income tax on the money itself—it is not income to them, it is an inheritance. However, any interest the account earned between your last tax return and your death is still taxable income to your estate. Your executor or the person handling your affairs will report this on a final tax return.
If the account is very large, your estate might owe federal estate tax, but this only applies to estates worth more than a certain amount (which varies by year and is quite high). Most people do not have to worry about this.
Changing or removing a beneficiary
You can change your beneficiary at any time while you are alive. Contact your bank, ask for a new beneficiary form, and submit it. The bank will update your account records. Make sure you keep a copy of the new form for your records.
If you want to remove a beneficiary entirely, you can do that too. Some banks call this "removing the POD designation." After you remove it, the account will go through probate when you die, just like any other account without a beneficiary.
Life changes—divorce, remarriage, estrangement, a child born—often trigger a need to update your beneficiary. Do not assume your old form is still valid. Check with your bank every few years to confirm who is listed and make changes if needed.
What happens if your beneficiary dies before you
If the person you named as beneficiary dies before you do, the account does not automatically go to their children or spouse. Instead, the money becomes part of your estate and goes through probate, or it goes to any alternate beneficiary you named on the form.
Some banks let you name a contingent or alternate beneficiary—a second person who receives the money if your first choice has already died. If you have named an alternate, the bank will pay them. If you have not, you should update your account right away and name someone else, or decide whether you want the account to go through probate.
Frequently Asked Questions
Can I name my estate as a beneficiary?
Technically yes, but it defeats the purpose. If you name your estate as beneficiary, the account goes through probate anyway, which is what you were trying to avoid. Name a person instead, or leave the account without a beneficiary if you want it to be part of your estate.
Does naming a beneficiary affect my will?
No. The beneficiary designation is separate from your will. The account goes to your named beneficiary regardless of what your will says. However, your will can address other assets and name guardians for minor children, so you still need one.
Can a creditor take money from a POD account after I die?
This varies by state and the type of debt. In some states, creditors can pursue a POD account to pay off your debts before the beneficiary receives it. In others, POD accounts are protected. Ask your bank or an attorney in your state what the rules are.
What if I name someone who is not a U.S. citizen?
You can name a non-citizen as beneficiary. The bank will still need to identify them, usually with a passport or individual tax identification number. After your death, they can claim the account, though they may face additional tax reporting requirements.
Can I name a charity as beneficiary?
Yes. Some people name a charity or nonprofit organization as a POD beneficiary as part of their giving plan. The bank will need the charity's legal name and tax identification number. This can be a tax-efficient way to leave money to a cause you care about.