A POD account is a bank account with a named beneficiary who automatically receives the money if you die
POD stands for "payable on death." It is a way to name someone to inherit the money in your bank account without going through probate — the court process that normally handles what happens to your assets after you die. While you are alive, the account works like any other bank account. You have full control, can withdraw money, and the beneficiary has no claim to it. When you die, the bank transfers the remaining balance directly to the person you named.
POD accounts are offered by most banks and credit unions. You set one up by filling out a form when you open the account or by updating an existing account. The form asks you to name the beneficiary and provide their Social Security number or tax ID. There is no cost to add a POD designation, and you can change or remove the beneficiary at any time while you are alive.
Key Takeaways
- A POD account passes money directly to your named beneficiary after your death without requiring probate court involvement.
- You retain complete control of the account during your lifetime, and the beneficiary cannot access or claim the money while you are alive.
- Most banks and credit unions offer POD designations at no cost, and you can change the beneficiary whenever you choose.
- The beneficiary receives the account balance tax-free, though the money may be subject to federal estate tax depending on the total size of your estate.
How a POD account differs from a will or trust
A will is a legal document that names an executor to distribute your property after you die, but everything in the will must go through probate court. That process takes months or even years and costs money in court fees and attorney fees. A POD account bypasses probate entirely — the bank simply transfers the money to the beneficiary once you provide a death certificate.
A living trust works similarly to a POD account in that it avoids probate, but it requires you to transfer ownership of your assets into the trust while you are alive. A POD account requires no paperwork beyond the initial beneficiary form. For a single bank account, a POD is simpler and faster than setting up a trust.
You can use POD accounts alongside a will or trust. Many people name one beneficiary on a POD account and leave other assets through their will or trust. This gives you flexibility in how different parts of your estate pass to different people.
What happens to a POD account when you die
When you die, the beneficiary contacts the bank with a death certificate and proof of their identity. The bank verifies the death and transfers the account balance to the beneficiary. This usually takes one to three weeks, though it can vary by bank. The beneficiary does not need a lawyer or court order — the bank handles the transfer directly.
If you name multiple beneficiaries, most banks divide the account equally among them unless you specify different percentages. If your named beneficiary dies before you do, the account becomes part of your regular estate and goes through probate unless you named a backup beneficiary. Some banks allow you to name a contingent beneficiary for this reason.
The money the beneficiary receives is not subject to income tax. However, if your total estate is large enough to owe federal estate tax (the threshold is over $13 million for deaths in 2023 and 2024, though this amount changes yearly), the POD account balance may be included in that calculation.
Types of accounts that can have POD designations
Savings accounts, checking accounts, and money market accounts can all have POD designations. Some banks also allow POD designations on certificates of deposit (CDs). You cannot use a POD designation on a credit card, loan account, or investment brokerage account — those have different rules for what happens after death.
If you have multiple accounts at the same bank, each one can have its own POD beneficiary. You might name your spouse on your checking account and your adult child on your savings account, for example. This gives you control over who receives what.
Setting up or changing a POD beneficiary
To add a POD beneficiary to a new account, ask the bank for the POD form when you open the account. You will need the beneficiary's full legal name, date of birth, and Social Security number or tax ID. The bank will record this information and keep it on file.
To change a POD beneficiary on an existing account, contact your bank and ask for the beneficiary change form. You can do this in person, by mail, or sometimes online, depending on your bank. Once you submit the form, the old beneficiary is removed and the new one takes effect. Keep a copy of the form for your records.
You can remove a POD beneficiary entirely by submitting a form to the bank. If you do, the account becomes part of your regular estate when you die and goes through probate. Some people remove a POD beneficiary if their circumstances change — for example, if they get divorced or if their relationship with the beneficiary ends.
Limits and things to know about POD accounts
A POD account does not protect money from creditors or lawsuits while you are alive. If you owe money to a creditor or lose a lawsuit, the creditor can go after the account balance just like any other asset. After you die, creditors can make claims against your estate, which may include the POD account balance if your estate does not have enough other assets to cover the debts.
If you are receiving means-tested benefits like Medicaid or Supplemental Security Income (SSI), a large POD account might affect your benefit amount or make you ineligible. Check with your benefits administrator before opening a large POD account if you receive government benefits.
A POD account is not the same as a joint account. In a joint account, the other person has access to the money while you are alive. In a POD account, only you have access until you die. This makes a POD account safer if you want to leave money to someone but do not want them to have control of it during your lifetime.
Frequently Asked Questions
Can the beneficiary access my POD account while I am still alive?
No. The beneficiary has no legal claim to the money in a POD account while you are alive. You have complete control and can withdraw, spend, or transfer all the money without the beneficiary's permission. The beneficiary only receives the remaining balance after you die.
What if I name someone as a POD beneficiary and then change my mind?
You can change the beneficiary at any time by contacting your bank and submitting a new beneficiary form. The old beneficiary is removed and has no claim to the account. You do not need the beneficiary's permission to make this change.
Do I have to pay taxes on money I leave in a POD account?
The beneficiary does not pay income tax on the money they receive from a POD account. However, if your total estate is large enough to owe federal estate tax, the POD account balance may be counted toward that tax. Estate tax thresholds are very high and change yearly, so most people do not owe it.
Can I name a minor as a POD beneficiary?
Yes, but the money cannot be released to a minor directly. The bank will hold the funds until the minor reaches the age of majority (usually 18 or 21, depending on your state), or you can name an adult custodian to manage the money for the minor until they are old enough.
What is the difference between a POD account and a joint account?
In a joint account, both people have access to the money while both are alive. In a POD account, only you have access while you are alive, and the beneficiary receives the money only after you die. A POD account gives you more control over when the other person can use the money.