Yes, you can name a beneficiary on most savings accounts

A beneficiary is a person you name to receive the money in your account if you die. When you name a beneficiary on a savings account, that money passes directly to them outside of your will — meaning it goes to them faster and without going through probate (the legal process that settles your estate). Most banks let you name one or more beneficiaries, and you can change your choice at any time while you're alive.

The process is straightforward: you fill out a form at your bank, name the person or people you want to receive the funds, and the bank keeps that information on file. It costs nothing to set up. The beneficiary doesn't need to know they're named, and naming someone doesn't give them access to your account while you're alive.

Key Takeaways

  • You can name a beneficiary on a savings account by filling out a form at your bank, and the process is free.
  • Money left to a beneficiary passes directly to them when you die, without going through your will or probate.
  • You can name more than one beneficiary and decide what percentage each person receives.
  • Naming a beneficiary does not give that person any access to your account while you are alive.
  • You can change or remove a beneficiary at any time by contacting your bank.

How to name a beneficiary at your bank

Contact your bank and ask for a beneficiary form — some banks call it a "Payable on Death" or POD form. You can usually get this form in person at a branch, by phone, or online through your account. Fill in the form with the beneficiary's full legal name, date of birth, and relationship to you (spouse, child, friend, etc.). You'll also provide their Social Security number or tax ID so the bank can identify them correctly.

If you want to name more than one beneficiary, you decide how the money splits between them. You might say 50% to your daughter and 50% to your son, or 100% to one person. Some people name a primary beneficiary (who gets the money first) and a contingent beneficiary (who gets it if the primary person has already died). Once you sign the form, the bank files it and your account is set up.

What happens when you die

When you pass away, your family or the person handling your affairs contacts the bank and provides a death certificate. The bank verifies the certificate, confirms who the beneficiary is, and transfers the money directly to that person's account or issues them a check. This usually takes a few weeks, much faster than money that goes through probate, which can take months or longer.

The beneficiary does not have to pay income tax on the money they receive from your account — it passes to them tax-free. However, if your account has earned interest since you last checked, that interest may be taxable to your estate, depending on the amount and your state's rules. Your bank can explain this when you set up the beneficiary.

Naming multiple beneficiaries and changing your choice

You can name as many beneficiaries as you want on a single account. You decide the percentage each person receives — for example, 40% to your sister, 40% to your brother, and 20% to your niece. If one beneficiary dies before you do, their share typically goes to the other named beneficiaries unless you've set up a contingent beneficiary to receive it instead.

You can change your beneficiary at any time by contacting your bank and requesting a new form. The bank will cancel the old beneficiary designation and file the new one. It's a good idea to review your beneficiary choices every few years, especially after major life changes like marriage, divorce, or the birth of children.

Beneficiaries versus joint account holders

A beneficiary is different from a joint account holder. A joint account holder can access and withdraw money from your account right now, while you're alive. A beneficiary cannot touch the account until you die. If you want someone to help manage your money while you're living, you would add them as a joint owner. If you only want them to receive what's left after you're gone, you name them as a beneficiary.

Some people do both — they have a spouse as a joint owner (so the spouse can pay bills if needed) and adult children as beneficiaries (so the children receive any remaining balance after the spouse's death). Talk to your bank about which setup makes sense for your situation.

What banks need from you to set up a beneficiary

You'll need your account number and the beneficiary's full legal name, date of birth, and Social Security number or tax ID. If the beneficiary lives outside the United States, you may need their address as well. Some banks also ask for the beneficiary's phone number or email so they can contact them after you pass away, though this is not required.

You do not need the beneficiary's permission to name them, and you do not need to tell them you've done so. However, it's often a good idea to let them know, so they understand what to expect and know to contact the bank if something happens to you.

Frequently Asked Questions

Can I name my minor child as a beneficiary?

Yes, but the money cannot go directly to a child under 18. When you name a minor, you usually also name a guardian or custodian who will manage the money until the child turns 18 or 21 (depending on your state). Ask your bank what options they offer for minor beneficiaries.

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

You can remove or change a beneficiary at any time by contacting your bank. There is no penalty, and the change takes effect once the bank processes the new form. You do not need the old beneficiary's permission.

Does naming a beneficiary affect my will?

No. A beneficiary designation on a bank account overrides your will for that specific account. If your will says your money goes to your sister but your bank account names your brother as beneficiary, your brother receives the account funds. The rest of your estate follows your will.

Can I name my estate as a beneficiary?

Yes, though it's usually not the best choice. If you name your estate, the money goes through probate like everything else, which takes longer. Most people name a person instead so the money reaches them faster.

What if my beneficiary dies before I do?

If you named only one beneficiary and they die before you, the money goes to your estate and is handled according to your will or your state's laws. This is why some people name a contingent beneficiary — a backup person who receives the money if the first beneficiary has already passed away.