Yes, a bank account can have a beneficiary. In the United States, most checking, savings, money market, and CD accounts let you name one or more people to inherit the balance when you die, using what banks call a Payable on Death (POD) or Transfer on Death (TOD) designation.1National Credit Union Administration. Payable-on-Death Accounts The money passes directly to the named person, outside of probate, once the bank has proof of your death.
What a POD Designation Actually Does
A POD designation is an instruction sitting on your account that tells the bank who should receive whatever is left in it when you die. The bank follows that instruction on its own once it receives a certified death certificate. No court order, no executor, no probate filing for the account itself.
While you’re alive, the person you name has no rights at all. They cannot see the balance, make withdrawals, or even confirm that you named them. You keep full control, and you can change or remove the beneficiary at any time by updating the form. The designation is essentially invisible until it matters.
Which Accounts Support Beneficiaries
Checking, savings, money market accounts, and certificates of deposit at most banks and credit unions all accept POD designations when the account is in your name alone. A few account types work differently:
- Joint accounts pass to the surviving co-owner by right of survivorship first. A POD beneficiary only receives anything after the last surviving owner dies. This surprises people regularly.
- Custodial accounts under UGMA or UTMA don’t take traditional beneficiary designations, because the minor already legally owns the assets.
- Business and commercial accounts generally can’t have POD beneficiaries. Ownership passes through the operating agreement or probate.
How to Add a Beneficiary
Most banks let you add a beneficiary through online banking under account settings or a section labeled “beneficiaries.” You can also do it at a branch on a paper form. It takes a few minutes.
For each person you name, you’ll need:
- Their full legal name, exactly as it appears on their government-issued ID
- Their Social Security number, which the bank uses to verify identity when the beneficiary later claims the funds2Office of the Comptroller of the Currency. Can a Bank Require a Beneficiary to Provide a Social Security Number
- Their date of birth and current address, for records and legal notices
Once the bank processes the request, you should get a confirmation by mail or email, and the designation should show up on your next monthly statement. Keep the confirmation. If a technical glitch drops the designation, that record is your proof of intent.
If Your Beneficiary Isn’t a U.S. Citizen
You can name a non-citizen. In place of a Social Security number, the bank may accept a Foreign Tax Identification Number (FTIN) or an Individual Taxpayer Identification Number (ITIN). Policies vary, so ask your bank what it requires.
Naming More Than One Person
You aren’t limited to a single beneficiary. Most banks let you name several and assign each a percentage of the balance. The percentages have to add to exactly 100%. If you don’t specify shares, many banks default to equal splits.
Primary and Contingent
A primary beneficiary is first in line. A contingent beneficiary only receives funds if every primary beneficiary has already died. Without a contingent, if your only primary predeceases you, the balance can fall back into your general estate and end up in probate anyway.
Per Stirpes vs. Per Capita
Some forms let you choose what happens if a beneficiary dies before you. The two standard options work very differently:
- Per stirpes (“by branch”): the deceased beneficiary’s share passes to their own children. If you name your two kids equally and one dies before you, that child’s half goes to your grandchildren from that branch.
- Per capita (“by head”): the deceased beneficiary’s share gets divided among the surviving beneficiaries. Same setup, but now your surviving child takes the full 100% and those grandchildren get nothing from this account.
Not every bank offers both. If the form doesn’t ask, find out how the bank handles the situation by default before you sign.
Naming a Minor as Beneficiary
You can name a child, but banks won’t release funds directly to a minor. The money sits frozen until a court appoints a guardian or custodian to manage it, which costs time and money and defeats the point of the POD in the first place.
A cleaner approach is to name a trust as the beneficiary, with the child as the trust’s beneficiary. The trustee you’ve already picked can then manage the money immediately without court involvement. Some account holders instead name a trusted adult with an informal understanding that the money is for the child, but that adult has no legal obligation to follow through.
How the Beneficiary Claims the Money
After you die, the beneficiary contacts the bank and provides a certified copy of the death certificate along with a valid government-issued photo ID. Most banks process the claim within a few business days to a couple of weeks. The bank closes the original account and either issues a cashier’s check or transfers the balance to the beneficiary’s own account.
When Nobody Knows the Account Exists
If no one claims the account, the bank is required to try to reach the account holder or beneficiary, and eventually the balance is turned over to the state as unclaimed property.3Office of the Comptroller of the Currency. When Is a Deposit Account Considered Abandoned or Unclaimed The typical dormancy period runs about five years, though it varies by state.4Investor.gov. Escheatment by Financial Institutions
Once funds escheat, most states let the rightful owner or heirs claim them indefinitely, and some states add interest after escheatment.4Investor.gov. Escheatment by Financial Institutions Every state runs an online unclaimed property database. The simplest fix is telling your beneficiaries the account exists and where it is.
How Beneficiaries Affect FDIC Insurance
Adding POD beneficiaries can substantially raise your FDIC coverage. A single-owner account is insured up to $250,000. When you add POD beneficiaries, the FDIC insures up to $250,000 per beneficiary, capped at $1,250,000 with five or more beneficiaries.5FDIC. FAQs – FDIC Electronic Deposit Insurance Estimator
- 1 beneficiary: $250,000
- 2 beneficiaries: $500,000
- 3 beneficiaries: $750,000
- 4 beneficiaries: $1,000,000
- 5 or more beneficiaries: $1,250,000
The coverage applies per owner, per bank. The FDIC calculates it based on the unique beneficiaries across all your POD and trust accounts at the same institution.5FDIC. FAQs – FDIC Electronic Deposit Insurance Estimator If you keep large cash balances at one bank, this is one of the easiest ways to protect deposits above the standard $250,000 limit.
Your Beneficiary Form Beats Your Will
This is where estate planning goes wrong most often. If your will leaves your savings account to your son, but the POD form names your daughter, your daughter gets the money. The bank follows the beneficiary designation, not the will. Courts consistently uphold this rule because a POD is a contract between you and the bank.
Divorce is the other common trap. In some states, divorce automatically revokes an ex-spouse’s beneficiary designation. In others, it doesn’t. If you divorce and forget to update the form, your ex may inherit the account no matter what your new will says. Review your beneficiary designations after marriage, divorce, a birth, or a death.
A surviving spouse may also have rights that override your beneficiary choice. Many states give a surviving spouse the right to claim a portion of the deceased spouse’s estate, and some include POD accounts in that calculation. The details come from your state’s elective share laws.
Taxes for the Person Who Inherits
Receiving a bank account through a POD is not a federal income tax event for the beneficiary. The balance itself isn’t taxed as income. Any interest the account earns after the owner’s death, though, is taxable income to the beneficiary.
The balance still counts as part of the deceased owner’s gross estate for federal estate tax purposes. POD accounts bypass probate; they don’t bypass estate tax. For 2026, the federal estate tax exemption is $15,000,000, so most estates owe nothing.6Internal Revenue Service. Whats New – Estate and Gift Tax If the total estate (POD accounts, life insurance, retirement accounts, everything) crosses that threshold, the bank balance is part of the taxable calculation.
If You Don’t Name Anyone
If you never designate a beneficiary, or every named beneficiary dies before you, the account typically becomes part of your probate estate. It’s then distributed under your will, or under your state’s intestacy laws if you don’t have one. That’s the exact process a POD was meant to avoid.
Naming a primary beneficiary and a contingent beneficiary is the simplest guard against that outcome. Checking the designations every few years, and after any major life change, costs nothing and can save your family weeks of legal work.