A payable on death account lets you name someone to inherit the money in that account when you die, without the account going through probate
A payable on death (POD) account is a bank account—checking, savings, or money market—that you set up with a named beneficiary. When you die, the money passes directly to that person outside of probate court. You keep full control and access to the account while you're alive. The beneficiary has no claim to the money until you die, and they don't need to know the account exists.
The bank holds the account in your name during your lifetime. You can withdraw money, close the account, or change the beneficiary whenever you want, with no permission needed from anyone. The POD designation is separate from your will—if you name someone as POD beneficiary and someone different in your will, the POD beneficiary gets the account balance, not the person named in your will.
POD accounts are sometimes called "transfer on death" (TOD) accounts, though TOD more often refers to the same arrangement for investment accounts or securities. The mechanics are identical: direct transfer to the named person, no probate.
Key Takeaways
- You name a beneficiary when you open the account or add the POD designation later, and that person receives the full balance when you die without the account entering probate.
- You retain complete control of the account during your lifetime—you can spend the money, change the beneficiary, or close the account at any time.
- The beneficiary has no legal claim to the money while you're alive and typically doesn't know the account exists unless you tell them.
- POD accounts work only for the account balance at the time of death; they do not cover debts, taxes, or other estate obligations.
- If you name a minor as beneficiary, the money may be held in a court-supervised account until they reach adulthood, depending on your state.
How the POD designation works at the bank
When you open a new account or convert an existing one, you tell the bank you want to add a POD beneficiary. The bank will ask for the beneficiary's full legal name and usually their Social Security number or tax ID. Some banks allow you to name multiple beneficiaries and specify how the money splits between them (equally, or in percentages you choose). Others require you to name one primary beneficiary and may allow contingent beneficiaries who inherit only if the primary beneficiary dies before you do.
The bank records this designation in their system. It costs nothing. You receive documentation showing the POD designation, and you should keep a copy with your important papers. If you want to change the beneficiary later, you contact the bank, complete a new form, and the old designation is replaced. The change takes effect when ready once the bank processes it.
When you die, your family or executor notifies the bank and provides a death certificate. The bank verifies the beneficiary's identity and releases the account balance directly to them. This usually happens within days or a few weeks, depending on the bank's process. The beneficiary does not need a court order or permission from your estate.
What happens to the money after you die
The beneficiary receives the account balance in a lump sum. They can deposit it into their own account, spend it, or invest it as they choose. The money is theirs to keep—it does not go back into your estate to pay debts or taxes (with one exception: if your estate owes federal taxes and has no other funds to pay them, the IRS can pursue the POD account in some circumstances, though this is rare and depends on state law).
If you name multiple beneficiaries and do not specify percentages, most banks split the balance equally among them. If one beneficiary dies before you do, that person's share typically goes to the surviving beneficiaries unless you named a contingent beneficiary to replace them. Check your bank's specific rules, because this varies.
If you name a minor as beneficiary, the bank cannot release the money directly to them. Instead, the funds may be held in a blocked account, or a court may appoint a guardian to manage the money until the child reaches adulthood (usually 18 or 21, depending on your state). This can delay access and create extra steps for the family.
POD accounts versus wills and trusts
A POD account is simpler and faster than leaving money through a will, because it bypasses probate entirely. A will must go through probate court, which can take months or years and costs money in court fees and attorney time. A POD account transfers the day the bank processes the death certificate.
A revocable living trust works similarly to a POD account—it transfers assets outside probate and you keep control during your lifetime. But a trust requires more paperwork to set up and costs more upfront. A POD account is free and takes minutes. For a single account or modest sum, a POD account is usually the better choice. For a larger estate with multiple assets, a trust may make more sense.
A POD account does not replace a will. You still need a will to name a guardian for minor children, specify who gets items that don't have a POD designation, and name an executor to handle your estate. A POD account only covers that one account.
Limits and things a POD account cannot do
A POD account does not reduce your taxable estate for federal estate tax purposes. If your total estate is large enough to owe federal estate tax (over $13.61 million in 2024, though this threshold changes yearly), the POD account balance counts toward that total. The beneficiary may owe estate tax on their inheritance, depending on the size of your total estate and your state's rules.
A POD account does not protect the money from creditors during your lifetime. If you owe money and a creditor sues, they can potentially reach the account balance. After you die, creditors generally cannot touch a POD account, because it passes directly to the beneficiary outside your estate.
A POD account cannot be used to hold money in trust for someone else. The account must be in your name, and you must be the one who can withdraw from it. If you want to set aside money for someone but keep control during your lifetime and have it go to them after you die, you need a trust, not a POD account.
If you become incapacitated and unable to manage your finances, a POD account does not automatically transfer to anyone. A power of attorney document or court guardianship is needed to give someone else access to the account while you're alive.
Which banks offer POD accounts and how to set one up
Most banks and credit unions offer POD designations on checking and savings accounts at no extra cost. Call your bank or visit in person and ask to add a POD beneficiary to an existing account, or request a POD account when opening a new one. You will need the beneficiary's full legal name and usually their Social Security number.
Some online banks and smaller credit unions may have different processes or may not offer POD designations on all account types. Check your bank's website or call to confirm they offer it and what information they need from you.
If you already have an account without a POD designation, you can add one at any time by contacting the bank. There is no fee, and the change takes effect once the bank processes the form. If you want to remove a POD designation and leave the account to your estate instead, you can do that too—just ask the bank to remove the beneficiary designation.
Frequently Asked Questions
Can the beneficiary access the money before I die?
No. The beneficiary has no legal claim to the account while you're alive. You have complete control and can spend all the money, change the beneficiary, or close the account without their knowledge or permission. The POD designation only takes effect after you die and the bank receives a death certificate.
What if I die without naming a beneficiary on my account?
The account becomes part of your estate and is distributed according to your will or, if you have no will, according to your state's intestacy laws. This means the money goes through probate court, which takes longer and costs more than a POD transfer. You can add a POD beneficiary to an existing account at any time.
Can I name my estate or a trust as the POD beneficiary?
Yes, but it defeats the purpose. If you name your estate as beneficiary, the account goes through probate anyway. If you want the money to go to a trust, it's usually better to name the trust as beneficiary on the account, though some banks have restrictions on this. Ask your bank what they allow.
What if the beneficiary dies before I do?
If you named only one beneficiary and they die before you, the account becomes part of your estate when you die and goes through probate unless you update the designation. If you named multiple beneficiaries, the surviving ones typically split the balance. If you named a contingent beneficiary, they inherit instead. Review your POD designation every few years and update it if circumstances change.
Does a POD account protect money from my creditors?
During your lifetime, no—creditors can pursue the account if you owe them money and they win a judgment. After you die, the money passes directly to the beneficiary and is generally protected from your creditors, because it's no longer part of your estate.