What a beneficiary does and why you need one
A beneficiary is a person you name to receive the money in your bank account if you die. When you name a beneficiary, that money passes to them directly — it does not go through your will, it does not get held up in probate court, and creditors cannot touch it. The bank has your instruction on file, so your family does not have to guess or fight over what you wanted.
You can name a beneficiary on almost any account: checking, savings, money market, or certificate of deposit (CD). You can name more than one person and decide what percentage each one gets. You can also name a backup beneficiary in case your first choice dies before you do.
The process takes about 15 minutes and costs nothing. You do it either in person at a branch, over the phone with customer service, or online through your bank's website — depending on what your bank allows.
Key Takeaways
- Name a beneficiary by contacting your bank directly through a branch visit, phone call, or online portal — the bank will have you fill out a form with the person's full legal name and relationship to you.
- You can name multiple beneficiaries and split the account balance between them in percentages you choose, or name a primary beneficiary and one or more backup beneficiaries.
- Money left to a beneficiary bypasses your will and probate court, reaching them faster and without court fees.
- Update your beneficiary if your circumstances change — marriage, divorce, birth of a child, or a falling-out with someone you named — because the bank will pay whoever is listed, regardless of what your will says.
How to name a beneficiary at your bank
Start by contacting your bank. Call the customer service number on the back of your debit card, visit a branch in person, or log into your online banking portal and look for a section called "Beneficiary," "Payable on Death," or "POD Account." Different banks use different names for the same thing.
The bank will ask you to provide the beneficiary's full legal name (the name on their birth certificate or ID), their date of birth, and their relationship to you — spouse, child, parent, friend, or other. Some banks also ask for a Social Security number or address, though not all do. Have this information ready before you call or visit.
You will fill out a form — either on paper at the branch or digitally online — that names the person and confirms you want the account to pass to them at your death. The bank keeps this form in your account file. There is no fee, and the change takes effect immediately, though you will not see it on your regular statements.
Naming multiple beneficiaries and backup beneficiaries
You can name more than one person to share the account. If you name two beneficiaries, you decide how much each one gets — for example, 50% to your daughter and 50% to your son, or 75% to your spouse and 25% to your adult child. Write these percentages on the form, and the bank will divide the account balance that way when you die.
You can also name a primary beneficiary (the person who gets the money first) and one or more contingent beneficiaries (backups who get the money only if the primary beneficiary dies before you do). For example: primary beneficiary is your spouse, and contingent beneficiary is your adult child. If your spouse is still alive when you die, your spouse gets everything. If your spouse dies before you do, your child gets everything instead.
Some banks let you name multiple contingent beneficiaries too. If you name two contingent beneficiaries and your primary beneficiary dies before you, the contingent beneficiaries split the account according to the percentages you set. Ask your bank what structure they allow — most support at least one primary and one contingent.
What happens when you die
When you pass away, your family or the person handling your affairs will notify the bank. They will provide a death certificate, and the bank will verify it. Once verified, the bank releases the account balance to your named beneficiary or beneficiaries — usually within two to four weeks, though it can be faster.
The beneficiary does not have to go to court, does not have to wait for probate, and does not have to pay court fees. The money is theirs to withdraw or transfer. This is one of the main reasons people name beneficiaries: it keeps money out of the probate process, which can take months or even years and costs money in legal fees.
If you die without naming a beneficiary, the account becomes part of your estate and goes through probate. Your will (if you have one) determines who gets it, but the process is slower and more expensive.
Updating or changing your beneficiary
You can change your beneficiary at any time while you are alive. Call the bank, visit a branch, or log into your online account and update the form. The change takes effect immediately — the old beneficiary has no claim to the money, and the new one does.
You should update your beneficiary if you get married, divorced, have a child, or if your relationship with the person you named changes significantly. Many people forget to update after a divorce and accidentally leave money to an ex-spouse. Some forget to add a new child born after they opened the account. The bank will not remind you — it is your responsibility to keep the information current.
If you are unsure who you named, call your bank and ask. They can tell you in one call. If you named someone years ago and do not remember, it is worth checking.
Beneficiaries and taxes
Money left to a beneficiary is not subject to federal income tax — the beneficiary does not owe tax on it, and you do not owe tax on it before you die. This is different from money left through your will or to your estate, which can trigger tax complications.
There is also no federal estate tax on most accounts, because the threshold is very high (over $13 million in 2023, though this changes by year and by law). Unless your total estate is extremely large, naming a beneficiary on your bank account will not create a tax bill for anyone.
If you have questions about how this affects your specific situation — for example, if you have a very large estate or if you are naming a beneficiary in another country — ask a tax professional or estate attorney. Your bank can tell you the mechanics, but they cannot give tax advice.
What to do if your beneficiary dies before you
If your primary beneficiary dies before you do, the money goes to your contingent beneficiary (if you named one). If you did not name a contingent beneficiary, the money becomes part of your estate and goes through probate — the same as if you had never named a beneficiary at all.
This is why naming a backup beneficiary is useful. If you name your spouse as primary and your adult child as contingent, you know the money will reach one of them no matter who dies first. If you only name your spouse and your spouse dies before you, you will need to update the account yourself or your child will have to go through probate to get the money.
If your beneficiary dies and you do not update your account, contact the bank and change the beneficiary to someone else or to a contingent beneficiary you name at that time.
Frequently Asked Questions
Can I name a minor as a beneficiary?
Yes, but the money cannot be released to them directly until they reach the age of majority (usually 18 or 21, depending on your state). The bank will hold the money or release it to a court-appointed guardian. To avoid this, some people name a trust or an adult custodian instead. Ask your bank what options they offer for minor beneficiaries.
What if I name a beneficiary and then write a will that says something different?
The beneficiary designation on the bank account wins. The bank will pay the person you named on the form, not the person your will names. This is why it is important to keep your beneficiary designations and your will in sync — if they conflict, the bank account goes one way and the rest of your estate goes another.
Do I need a lawyer to name a beneficiary?
No. You can do it yourself by calling the bank or visiting a branch. A lawyer is not required and is not necessary for this step. If you have a complex estate or many accounts, a lawyer can help you coordinate all your beneficiary designations, but naming one beneficiary on one account is something you can handle alone.
Can a creditor take money from a beneficiary account?
Generally no. Once you die, money in a beneficiary account goes directly to the beneficiary and is protected from your creditors. However, if a creditor sues you while you are alive and wins a judgment, they may be able to freeze or garnish the account before you die. After your death, the money is safe from creditors.
What if I want to remove a beneficiary?
Call the bank and ask them to remove the beneficiary designation. Some banks will let you do this online. Once removed, if you die without naming a new beneficiary, the account becomes part of your estate and goes through probate. You can also replace the old beneficiary with a new one in the same step — just tell the bank the new person's name and information.