Yes, you can name a beneficiary on most bank accounts, and it bypasses probate when you die
A beneficiary on a bank account is a person you name to receive the money in that account after you die. When you add one, the account becomes a payable-on-death (POD) account or transfer-on-death (TOD) account, depending on your bank's terminology. The money passes directly to that person outside of probate — meaning it does not go through your will or the court system, and the beneficiary can usually access it within days or weeks instead of months.
Most banks let you name a beneficiary for free, either when you open the account or by updating your account later. You can typically name one person, multiple people, or alternate beneficiaries if your first choice dies before you do. The beneficiary has no access to the account while you are alive — they cannot withdraw money, see the balance, or make decisions about it. Only after you die does the money transfer to them.
Key Takeaways
- A beneficiary on a bank account receives the money after you die without the account going through probate or your will.
- You can name a beneficiary for free at most banks by filling out a form in person, online, or by phone.
- The beneficiary has no access to the account while you are alive and cannot see the balance or withdraw money.
- If you name multiple beneficiaries, you can specify whether they split the money equally or in different percentages.
- You can change or remove a beneficiary at any time during your lifetime without the beneficiary's permission.
How to add a beneficiary to your account
Contact your bank and ask to add a payable-on-death beneficiary or transfer-on-death beneficiary — the bank will know which term they use. Most banks have a form you fill out, either on paper or through your online banking portal. You will need to provide the beneficiary's full legal name, date of birth, and Social Security number or tax ID.
Some banks let you do this entirely online through your account settings. Others require you to visit a branch or call a phone number. A few still require a notarized form, though this is less common. Call your bank's customer service line or visit a branch to ask which method they accept. There is no cost to add a beneficiary.
You can name more than one beneficiary. If you do, specify how the money should split — for example, 50% to your daughter and 50% to your son, or 100% to your spouse if they survive you, and if not, then to your children equally. The bank's form will have space for these instructions.
What happens when you die
When you die, the person or people you named as beneficiary can contact the bank with a death certificate and proof of their identity. The bank will verify the death and transfer the money to the beneficiary's account or issue a check. This usually takes one to three weeks, though some banks are faster.
The beneficiary does not need to go to court, file paperwork with the probate judge, or wait for your will to be read. The money is theirs to keep — the bank does not take it back to pay your debts or taxes (with limited exceptions for federal taxes owed). This is one of the main reasons people use POD accounts: speed and simplicity.
Naming alternate beneficiaries and what happens if they die first
You can name an alternate beneficiary — someone who receives the money if your first choice dies before you do. For example, you might name your spouse as the primary beneficiary and your adult child as the alternate. If your spouse dies before you, the money goes to your child when you die.
If you name multiple people and one dies before you, the money usually goes to the surviving beneficiaries unless you specified otherwise. For instance, if you named your two children equally and one dies before you, the surviving child typically receives the full amount. Check your bank's rules, because some banks split the deceased beneficiary's share among the other beneficiaries, while others may return it to your estate.
Changing or removing a beneficiary
You can change your beneficiary at any time while you are alive. Contact your bank, fill out a new form, and name a different person. The old beneficiary has no say in this — you do not need their permission. Once the change is processed, the new beneficiary is the one who will receive the money when you die.
If you want to remove a beneficiary entirely, you can do that too. The account will then pass through your will or your state's intestacy laws (the rules for who inherits when there is no will). Removing a beneficiary means the money will likely go through probate, which takes longer and costs more, so make sure that is what you want.
POD accounts and your will or trust
A payable-on-death account is separate from your will. If your will says the money should go to one person and your POD beneficiary is someone else, the POD beneficiary wins — they get the money. The will does not override the beneficiary designation.
If you have a living trust, you may want to name the trust as the beneficiary of your bank account instead of a person. This keeps the account coordinated with the rest of your estate plan. Talk to an attorney or your bank about whether this makes sense for your situation.
Taxes and debts after you die
In most cases, the beneficiary receives the full amount without the bank taking money out for taxes or debts. However, if you owe federal income taxes or federal student loans, the government can claim the money in the account to pay what you owed. State laws vary on whether creditors can reach a POD account, so check your state's rules if you are concerned.
The beneficiary does not pay income tax on the money they receive from a POD account — it is not considered income to them. If the account earned interest before you died, that interest may be taxable to your estate, but the bank will handle the reporting.
Frequently Asked Questions
Can a beneficiary withdraw money from my account while I'm alive?
No. A beneficiary has no access to the account during your lifetime. Only you can withdraw money or make changes. The beneficiary's rights begin only after you die and they provide a death certificate to the bank.
What if I name my minor child as a beneficiary?
The money will be held by the bank until the child reaches the age of majority (usually 18 or 21, depending on your state). You may want to name a guardian or trustee to manage the money for them instead, or set up a trust. Talk to your bank about your options.
Can I name a charity or organization as a beneficiary?
Yes, many banks allow you to name a nonprofit organization as a beneficiary. You will need the organization's legal name and tax ID. This is a simple way to leave money to a cause you care about without changing your will.
What if I get divorced — does my ex-spouse stay as beneficiary?
Yes, unless you change it. Divorce does not automatically remove an ex-spouse from a bank account beneficiary designation. You must contact your bank and update the form yourself. Many people forget this step, so review your beneficiaries after any major life change.
Do I need a lawyer to add a beneficiary?
No. Adding a beneficiary is a simple form you can complete yourself at your bank. You do not need a lawyer or pay any fees. However, if you have a complex estate or want to coordinate this with a will or trust, talking to an attorney can help you make the right choices.