{"id":287048,"date":"2017-08-12T18:19:00","date_gmt":"2017-08-12T23:19:00","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/estate\/probate\/bank-account-beneficiary-rules.html"},"modified":"2025-07-24T02:43:00","modified_gmt":"2025-07-24T07:43:00","slug":"bank-account-beneficiary-rules","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/estate\/probate\/bank-account-beneficiary-rules.html","title":{"rendered":"Selecting Bank Account Beneficiaries"},"content":{"rendered":"\n
\n

Selecting Bank Account Beneficiaries<\/h1>\n\n
\n
\n By Oni Harton, J.D.<\/a> | Legally reviewed by Aisha Success, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
\n

This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
\n

The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

\n
\n
\n

Key Takeaways<\/h2>\n

Selecting beneficiaries for bank accounts is the process of designating a person or entity to inherit the funds in a bank account upon the account holder’s death. This is done by creating a payable-on-death (POD) account, which allows the bank account to bypass the probate process.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

\"\"<\/figure>\n\n\n\n

Creating your estate plan may seem overwhelming. You probably think it has a lot of complicated legal issues and paperwork. This explains why you’ve been putting off speaking with an estate planning attorney. You tell yourself you will get around to it when you have more time. Beneficiary designations are one of the easiest ways to transfer assets to loved ones and family members.<\/p>\n

This cost-free service will transform your accounts into a\u00a0type of informal trust<\/a>. An account with a named beneficiary is a payable-on-death (POD) account.<\/p>\n

Your financial institution can give you a form for each account. The person you choose to inherit your account is a beneficiary. After your death, the account beneficiary can immediately claim ownership.<\/p>\n

Before setting up your account, reviewing bank account beneficiary rules is a good idea. This article also discusses other types of accounts that can transfer assets through beneficiary designations.<\/p>\n

Why Select a Bank Account Beneficiary?<\/h2>\n

A POD account is a popular method for\u00a0avoiding probate<\/a>. It’s quick and cost-effective. It’s a good method to transfer property after death.<\/p>\n

After you die, your representative distributes probate assets under the court’s supervision. The legal process of probate can take months or even years to complete. During this time, your loved ones have no access to the property you intended for them.<\/p>\n

When you name an account beneficiary, that account does not become part of your estate at your death. The account proceeds transfer to the beneficiary. The proceeds become their personal property.<\/p>\n

Who Can Be an Account Beneficiary?<\/h2>\n

The account holder is in charge of naming an account beneficiary. This is true whether you make the transfer-on-death designation through a TOD or POD beneficiary designation.<\/p>\n

The named beneficiary can be anyone you choose. It can be anyone from your high school best friend to your kids. You can even name several beneficiaries to a single account. In that case, you would select the percentage each person receives.<\/p>\n

Some financial institutions may require your beneficiary’s Social Security number. You’ll probably need to discuss your choice with your intended beneficiary.<\/p>\n

Also, remember a joint account. When you have a joint bank account, the joint account holder also owns the assets. So there is no need for probate when you die. The joint account holder already owns the assets.<\/p>\n

Naming a Charity As a Beneficiary<\/h3>\n

Charitable groups and nonprofit organizations can serve as bank account beneficiaries. Be sure the\u00a0Internal Revenue Service<\/a>\u00a0recognizes the group you select. Corporations, partnerships, and limited liability companies cannot be your designated beneficiary.<\/p>\n

Keep Beneficiary Designations Updated<\/h3>\n

You must maintain updated beneficiary designations. If circumstances in your life change, update your account beneficiary.<\/p>\n

If you fail to do so, it could come with unintended consequences. You could, for example, unintentionally leave money to your former spouse. If your beneficiary dies before you, the account assets become part of your estate. Your representative will distribute the account funds under the terms of your will.<\/p>\n

What Rights Does an Account Beneficiary Have?<\/h2>\n

While you’re alive, your accounts are your personal property. You can spend your money, close your account or change beneficiaries.<\/p>\n

Your account will operate just as it did before designating a beneficiary. A beneficiary has no rights to your property until after you die. The only difference you may notice is your account being called an \u201cin trust for” or ITF account.<\/p>\n

When Can a Beneficiary Claim Account Assets?<\/h2>\n

After your death, the beneficiary has a right to collect any money remaining in your account. They need to go to the bank with proper identification. They must also bring a certified copy of the death certificate. The bank will have a copy of the form you filled out naming them the beneficiary.<\/p>\n

The bank will provide the new account owner with a few more forms. The money gets transferred. It’s easy as that\u2014no waiting for probate. The laws of your state may require a brief waiting period, and creditors may have the right to settle final debts.<\/p>\n

What Other Types of Assets Can Have a Beneficiary Designation?<\/h2>\n

Besides bank accounts, several types of accounts use\u00a0beneficiary designations<\/a>. Many people hold significant assets in accounts subject to beneficiary designations.<\/p>\n

Other accounts may include:<\/p>\n