Yes, you can name a beneficiary on most bank accounts, and it bypasses probate when you die

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 named, without going through 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 and CDs usually do. Joint accounts work differently—the surviving joint owner gets the money automatically, regardless of what your will says. IRAs and retirement accounts have their own beneficiary rules that override your will entirely.

The process is straightforward: you fill out a form at your bank, name one or more beneficiaries, and update it if your life changes. The account stays in your name and under your control while you're alive. The beneficiary has no access to the money until after you die.

Key Takeaways

  • Payable-on-death beneficiaries receive the account balance directly after your death without the account going through probate.
  • You can name multiple beneficiaries and specify what percentage each person receives, or name alternates if your first choice dies before you do.
  • The beneficiary designation form is separate from your will, so if you name someone in your will but a different person on the bank form, the bank form controls.
  • Joint account owners automatically inherit the full balance when the other owner dies, even if you named a different beneficiary on the account.
  • Retirement accounts like IRAs and 401(k)s have their own required beneficiary rules that take priority over your will and any POD designation.

How to set up a payable-on-death beneficiary

Call your bank or visit a branch and ask for the POD beneficiary form or transfer-on-death form. Different banks use different names, but the function is the same. You'll provide the beneficiary's full legal name, date of birth, and Social Security number or tax ID. Some banks also ask for their address.

You can name one person or split the account among multiple beneficiaries. If you name two people, you decide whether they each get an equal share or whether one gets more. You can also name an alternate beneficiary—someone who inherits if your first choice dies before you do.

Sign the form in front of a bank employee (some banks require this, others don't). The bank keeps a copy and updates their records. You keep a copy for your files. There's no cost, and the designation takes effect when ready, though the beneficiary won't receive anything until after you die and the bank is notified.

What happens when you die

After you die, your beneficiary contacts the bank with a death certificate and a government-issued ID. The bank verifies the information and transfers the full account balance to the beneficiary. This usually takes one to three weeks, depending on how quickly the beneficiary submits the paperwork and how busy the bank is.

The money does not go through probate, which means it does not get held up in court, does not get split according to your will, and does not get reduced by probate fees. The beneficiary gets the full amount. If you named multiple beneficiaries, each receives their designated share.

If your beneficiary dies before you do and you never named an alternate, the money goes into your estate and gets distributed according to your will or your state's intestacy laws. This is why updating your beneficiary form matters—if your circumstances change, the old designation stays in effect unless you change it.

The difference between POD beneficiaries and joint account owners

A joint account has two or more owners with equal access to the money while everyone is alive. When one owner dies, the surviving owner automatically owns the full balance. This happens outside of probate, similar to a POD beneficiary, but the mechanics are different.

With a joint account, the surviving owner can use the money when ready—they don't have to wait for paperwork or the bank's approval. But both owners can withdraw money while alive, so if you add someone as a joint owner to avoid probate, that person can spend the money before you die.

A POD beneficiary has no access to the account while you're alive. Only you can withdraw money or close the account. This gives you full control and protects the money from the beneficiary's creditors or ex-spouse. If you want to keep control but still avoid probate, POD is the safer choice.

Retirement accounts and their own beneficiary rules

IRAs, 401(k)s, and other retirement accounts require you to name a beneficiary as part of the account setup. This beneficiary designation overrides your will and any POD form you fill out elsewhere. If you name your spouse as the IRA beneficiary but your will says the money goes to your children, the spouse gets it.

Retirement account beneficiaries have special tax treatment. A surviving spouse can roll the IRA into their own account and delay withdrawals. Non-spouse beneficiaries must take distributions over time, following rules that depend on their age and relationship to you. These rules changed in 2023 under the find Act, so if your account is old, the rules your beneficiary follows may be different from what you expect.

Check your retirement account beneficiary form every few years, especially after major life events like marriage, divorce, or the birth of children. Many people name a beneficiary when they open the account and never update it, leaving money to an ex-spouse or a deceased relative.

What happens if you don't name a beneficiary

If you die without naming a POD beneficiary, the account becomes part of your estate. Your will determines who gets it. If you don't have a will, your state's intestacy laws decide—usually your spouse gets some or all of it, and children or parents get the rest, depending on who survives you.

Money in your estate goes through probate court, which takes time and costs money. Court fees, attorney fees, and executor fees reduce what your heirs actually receive. The process is public, meaning anyone can see what you owned and who inherited it. Naming a beneficiary avoids all of this.

Some people avoid naming a beneficiary because they're unsure who to choose or they think they might change their mind. You can always change or remove a beneficiary by filling out a new form—there's no penalty or waiting period. It's easier to name someone now and update it later than to leave the decision unmade.

Beneficiary designations and creditors

Money in a POD account generally cannot be taken by your creditors after you die. Once the account transfers to the beneficiary, it belongs to them, not to your estate. Your creditors can make claims against your estate, but not against money that bypassed probate.

There's one exception: if you name your own estate as the beneficiary (which some people do by accident), the money goes back into probate and becomes available to creditors. Avoid naming your estate as the beneficiary unless you have a specific reason to do so.

While you're alive, creditors can still reach the money in the account because it's yours. The POD designation only protects the money after you die and it transfers to the named beneficiary.

Updating or removing a beneficiary

Contact your bank and ask to update your beneficiary designation. You'll fill out a new form with the new beneficiary's information. The bank will ask you to sign it, usually in front of a witness or bank employee. Once the bank processes it, the old designation is cancelled and the new one takes effect.

You can remove a beneficiary entirely by submitting a cancellation form, though this means the account will go through probate if you die without naming someone else. You can also change the percentages if you named multiple beneficiaries—for example, if you originally split the account 50-50 between two people and now want to give 70% to one and 30% to the other.

Keep your beneficiary information current. Life changes—marriages, divorces, births, deaths—can make your old designation outdated. If you go through a divorce, some states automatically remove your ex-spouse as a beneficiary, but not all do. Don't assume the bank will update it for you.

Frequently Asked Questions

Can I name my minor child as a beneficiary?

Yes, but the money cannot go directly to the child because minors cannot legally control bank accounts. The bank will hold the money until the child reaches the age of majority (usually 18 or 21, depending on your state), or you can name a custodian to manage it. Ask your bank what options they offer for minor beneficiaries.

What if I name someone as a beneficiary and then we have a falling out?

You can change the beneficiary at any time while you're alive by submitting a new form to your bank. The old designation is cancelled when ready. There's no waiting period or penalty. If you die before updating it, the money goes to whoever was named on the most recent form the bank has on file.

Does naming a beneficiary affect my taxes?

Naming a beneficiary does not create a tax event for you while you're alive. After you die, the beneficiary may owe income tax on interest or earnings the account generated, but not on the original balance. Your estate may owe estate tax if it's large enough, but that depends on your state and the total value of everything you owned, not just the bank account.

Can a creditor freeze my account if I have a beneficiary named?

Yes, while you're alive. The account is yours, so creditors can place a freeze or levy on it to collect a debt. The POD beneficiary designation only protects the money after you die and it transfers to the beneficiary. Once the transfer happens, the money belongs to the beneficiary and is generally out of reach of your creditors.

What if my beneficiary dies before I do?

If you named an alternate beneficiary, that person gets the money. If you didn't name an alternate, the money goes into your estate and is distributed according to your will or your state's intestacy laws. This is why naming an alternate is a good idea—it ensures the money goes where you want it even if your first choice dies before you do.