A POD account is a bank or investment account with a named beneficiary who automatically inherits the money when you die

POD stands for Payable on Death. It is a way to name someone to receive the funds in your account without going through probate — the court process that normally distributes a dead person's assets. When you open a POD account or add a POD designation to an existing account, you name a beneficiary. If you die, that person presents a death certificate to the bank, and the money goes directly to them.

The account works normally while you are alive. You have full control, can withdraw money, earn interest, and change the beneficiary whenever you want. The beneficiary has no access to the account and no say in how you use it — they only receive what remains when you pass away.

Key Takeaways

  • A POD account bypasses probate, meaning the beneficiary receives the money faster and without court involvement.
  • You keep complete control of the account during your lifetime and can change or remove the beneficiary at any time.
  • Most banks and credit unions offer POD designations on savings accounts, checking accounts, and money market accounts.
  • The beneficiary must present a death certificate to claim the funds, and the money is not subject to income tax when transferred.
  • POD accounts are separate from your will and do not override it — they pass outside of probate entirely.

How to set up a POD account

When you open a new account at a bank or credit union, you can ask to add a POD designation at that time. The bank will ask for the beneficiary's full legal name and usually their Social Security number. Some banks call this a "transfer on death" or TOD account, but the function is the same.

If you already have an account, you can add a POD designation by contacting your bank directly. Ask to speak with someone in new accounts or customer service. They will give you a form to complete with your beneficiary's information. There is no cost to add this designation, and it takes only a few minutes.

You can name more than one beneficiary. If you do, you will specify what percentage each person receives. For example, you might name your two adult children as 50% beneficiaries each. When you die, the bank divides the account balance according to those percentages.

What happens when the account owner dies

When you pass away, your beneficiary contacts the bank with a death certificate. The bank verifies the certificate and transfers the account balance directly to the beneficiary. This usually takes one to three weeks, depending on how quickly the beneficiary provides the paperwork and how busy the bank is.

The beneficiary does not pay income tax on the money they receive from a POD account. The funds are not considered income — they are a transfer of assets. However, if the account earned interest between your death and the transfer, that interest may be taxable to the beneficiary's estate, depending on the amount and state law.

The POD account does not go through probate, which means it is not part of your estate for court purposes. This is the main advantage: the money reaches your beneficiary without delay and without the cost of probate proceedings.

POD accounts versus wills and trusts

A POD account works differently from a will. A will is a document that names an executor and says who gets your property after you die. The will must go through probate court, which can take months or years. A POD account skips probate entirely because the bank knows exactly who should receive the money.

A revocable living trust is another tool that bypasses probate. Like a POD account, a trust lets you name beneficiaries and transfer assets outside of court. The difference is that a trust requires you to transfer ownership of your assets into the trust during your lifetime, and it costs money to set up. A POD account is simpler and free.

You can have both a POD account and a will. They do not conflict. The POD account passes to your named beneficiary outside of probate. Everything else in your estate goes through probate according to your will. Many people use POD accounts for their bank savings and a will for other property.

Which accounts can have POD designations

Most banks and credit unions allow POD designations on savings accounts, checking accounts, and money market accounts. Some banks also allow POD on certificates of deposit (CDs). Ask your bank which account types support this feature.

Investment accounts like brokerage accounts and retirement accounts (401(k)s and IRAs) have their own beneficiary designation systems. You do not use POD for these — instead, you name a beneficiary directly with the investment company. The process is similar, but the form and rules are different.

If you are unsure whether your account type supports POD, call your bank's customer service line or visit a branch. They can tell you immediately and help you set it up if it is available.

Changing or removing a POD beneficiary

You can change your POD beneficiary at any time while you are alive. Contact your bank and ask to update the designation. The bank will give you a new form to complete with the new beneficiary's information. This takes a few days to process.

You can also remove the POD designation entirely, which means the account will go through probate when you die. This is useful if your circumstances change — for example, if you want the money to go to your estate instead of to a specific person, or if you want the court to oversee the distribution.

Keep in mind that if you name a beneficiary and then die without updating the designation, the money goes to that person regardless of what your will says. Make sure your POD beneficiary is who you actually want to receive the account.

What can go wrong with a POD account

The main risk is naming the wrong person or forgetting to update the beneficiary after a major life change. If you divorce and do not remove your ex-spouse as the POD beneficiary, they will still receive the account when you die — even if your will says otherwise. Check your POD designations whenever you marry, divorce, or have children.

Another issue is if the beneficiary dies before you do. In that case, the account usually goes to your estate and is distributed according to your will. Some banks allow you to name a "contingent beneficiary" — a second person who receives the money if the first beneficiary has already died. Ask your bank if this option is available.

If you have a large account and multiple heirs, a POD account can create conflict if some family members feel left out. Unlike a will, which is public and can be challenged in court, a POD designation is private. Make sure your family understands your choices to avoid disputes after you die.

Frequently Asked Questions

Can a creditor take money from a POD account?

While you are alive, yes — a creditor can pursue a judgment against your account like any other asset. After you die, the money in a POD account generally cannot be taken by your creditors because it passes directly to the beneficiary outside of probate. However, some states have exceptions, so check your state's law or ask your bank.

What if I name a minor as my POD beneficiary?

A minor cannot legally control a bank account. If your POD beneficiary is under 18 when you die, the bank will hold the money in trust until they reach the age of majority (usually 18 or 21, depending on your state). You may want to name an adult instead or set up a trust to manage the money for a young beneficiary.

Do I need a lawyer to set up a POD account?

No. You can set up a POD account directly with your bank at no cost. A lawyer is not required. However, if you have a complex estate or want to coordinate your POD accounts with a larger estate plan, talking to an attorney can help you make the best choices.

Is a POD account the same as a joint account?

No. A joint account has two owners who both can access and withdraw money during their lifetimes. A POD account has one owner, and the beneficiary has no access until after the owner dies. They serve different purposes and have different tax and legal consequences.

Can I have multiple POD accounts at different banks?

Yes. You can open POD accounts at as many banks as you want and name different beneficiaries for each one. This can be useful if you want to leave money to different people or if you want to split your savings across multiple institutions for safety.