Yes, you can name a beneficiary on most bank accounts, and it bypasses probate
Most banks let you name a payable-on-death (POD) beneficiary on checking and savings accounts. When you die, the money in that account goes directly to the person you name—it does not go through your will or probate court. The bank handles the transfer once you provide a death certificate and the beneficiary shows ID.
Not every account type supports this. Money market accounts usually do. Certificates of deposit (CDs) usually do. Joint accounts work differently—the surviving owner typically gets the money automatically, regardless of what your will says. Some banks also offer transfer-on-death (TOD) accounts, which work the same way but may have different names depending on your bank.
The key difference between a POD beneficiary and a will is speed and cost. A will goes through probate, which takes months and costs money in court fees. A POD beneficiary skips probate entirely. The bank can release the funds within days or weeks of receiving proof of death.
Key Takeaways
- You can name a payable-on-death beneficiary on most checking and savings accounts at no cost, and that person receives the money directly when you die without going through probate.
- The beneficiary you name on your bank account overrides what your will says about that money, so make sure the two documents match if you want consistency.
- You can name multiple beneficiaries and specify what percentage each one receives, though rules vary by bank.
- If your beneficiary dies before you do, the money goes back into your estate unless you name a backup beneficiary on the account.
- You can change or remove a beneficiary at any time by contacting your bank—no lawyer needed.
How to set up a beneficiary on your account
Contact your bank directly and ask to add a payable-on-death beneficiary. You do not need a lawyer or any special form—the bank has its own paperwork. You will need the beneficiary's full legal name, date of birth, and usually their Social Security number or tax ID. Some banks ask for their address as well.
The bank will give you a form to sign. Once you sign it and return it, the designation is active. Keep a copy for your records. If you set this up online, take a screenshot or print the confirmation page showing the beneficiary name and the date you made the change.
There is no cost to add a beneficiary. If a bank charges you a fee for this service, that is unusual—shop around or ask the bank to waive it.
What happens when you name multiple beneficiaries
You can name more than one person. Most banks let you specify a percentage for each one—for example, 50% to your daughter and 50% to your son. When you die, the bank divides the account balance according to those percentages.
Some banks use a different method: they list beneficiaries in order, and if the first one dies before you, the money goes to the second one, and so on. Ask your bank which method they use before you sign the form. This matters because it changes who gets the money if a beneficiary dies before you do.
If you do not specify percentages and name multiple beneficiaries, the bank's default is usually to split the money equally. Write down what you chose and keep it with your important documents so your family knows what to expect.
How a beneficiary designation overrides your will
The person you name as a POD beneficiary gets that money regardless of what your will says. If your will leaves your bank account to your son but you named your daughter as the POD beneficiary, your daughter gets the account. The will does not control it.
This can create problems if your will and your beneficiary designations do not match. For example, if you want your estate divided equally among three children but you only named one child as the POD beneficiary on your main account, that child gets the account and the other two get nothing from it.
Before you set up a beneficiary, think about what you want to happen to that account and make sure your will and your beneficiary designations point in the same direction. If you change your will, review your bank account beneficiaries too.
What happens if your beneficiary dies before you
If the person you named dies before you do, the money does not automatically go to anyone else unless you named a backup (or "contingent") beneficiary. Instead, the account becomes part of your estate when you die, and it is distributed according to your will or your state's intestacy laws if you do not have a will.
To avoid this, name a contingent beneficiary—a second person who receives the money if your first choice dies before you. You can usually name multiple contingent beneficiaries as well. Ask your bank whether they support contingent beneficiaries on the account type you have.
If a beneficiary dies, contact your bank and update the designation. Do not wait until you are close to death—do it as soon as you know the person has passed.
Joint accounts and beneficiary designations
A joint account works differently from a POD beneficiary. On a joint account, the surviving owner gets the money automatically when the other owner dies, regardless of what either person's will says. This is called right of survivorship.
Some joint accounts do not have right of survivorship—they are called "tenants in common" accounts. On these accounts, your share goes into your estate when you die, not to the other owner. Ask your bank which type of joint account you have.
You can have both a joint account and a POD beneficiary on a separate account. The joint account goes to the surviving owner. The POD account goes to the beneficiary you named. They are separate transactions.
State laws that affect beneficiary designations
Most states allow POD beneficiaries on bank accounts, but a few states have restrictions or use different terminology. Some states call it a "transfer-on-death" account instead. A few states limit how many beneficiaries you can name or require the bank to use a specific form.
Your bank knows your state's rules and will tell you what is allowed when you ask to add a beneficiary. If you move to a different state after you set up a beneficiary, contact your bank and ask whether the designation is still valid under your new state's law. In most cases it is, but it is worth confirming.
If you have accounts in multiple states, each account follows the law of the state where the bank is located, not where you live. This usually does not cause problems, but it is another reason to keep your beneficiary designations organized and up to date.
Frequently Asked Questions
Can I change my beneficiary after I set one up?
Yes. Contact your bank and ask to update the beneficiary designation. You can change it as many times as you want, at any time, as long as you are alive and mentally competent to make the change. The bank will give you a new form to sign. Keep a copy of the updated form.
What if I do not name a beneficiary?
The money in the account becomes part of your estate when you die. It goes through probate and is distributed according to your will, or according to your state's intestacy laws if you do not have a will. This takes longer and costs more than a POD beneficiary.
Does naming a beneficiary affect my taxes?
Not during your lifetime. When you die, the beneficiary may owe income tax on any interest the account earned after your death, but the bank will send them a form showing how much. The beneficiary does not pay estate tax on money received through a POD designation in most cases, though very large estates may have other tax consequences—talk to a tax professional if your estate is large.
Can my creditors take money from a POD account?
During your lifetime, yes—creditors can go after any of your accounts, including ones with POD beneficiaries. After you die, the money goes to the beneficiary and is usually protected from your creditors. Some states have exceptions for certain types of debt like taxes or medical bills, so check your state's law if you are concerned.
What if I name someone who is a minor?
The bank will still let you name a minor as a beneficiary. When you die, the money cannot go directly to the minor—a court will appoint a guardian to manage it until the child turns 18 or 21, depending on your state. To avoid this, name an adult you trust, or set up a trust and name the trust as the beneficiary. Talk to a lawyer if you want to leave money to a child.