Payable-on-death bank accounts are a fast and affordable way to transfer funds to a beneficiary on your death. Payable-on-death bank accounts allow a bank to release funds to a named beneficiary on the account holder’s death without the beneficiary having to go to court, whether or not there was a will. Learn about using payable-on-death bank accounts in this article.
Special thanks to the Texas Access to Justice Commission. This article has been revised from original material by the Commission.
What is a payable on death bank account?
A payable-on-death bank account (sometimes called a POD bank account) is a bank account that you set up to go to a named beneficiary automatically on your death, without court involvement, and without other estate planning instructions (like a will or a trust).
You may leave a payable-on-death account to one or more beneficiaries.
Why should I have a payable on death bank account?
It can be a good idea to set up accounts payable on death to your named beneficiary so that the funds can be paid immediately on your death.
This means your beneficiary can get the funds without:
- legal fees, or
- waiting to go to court.
How do I get a payable on death bank account?
- Decide who you want to get the money or other asset in any checking account, savings account, certificates of deposit, safe deposit box, or other bank account. You can name more than one person, if you’d like.
- Go to your bank and tell them that you want to make your bank account payable on death.
- Your bank will ask you to name a beneficiary or beneficiaries (the person or people you want the money to go to) and to sign your name to confirm that this is what you want to do.
Do I need a will to have a payable-on-death bank account?
No, you do not need a will (formally called a Last Will and Testament) in order to have a payable-on-death bank account.
Payable-on-death bank accounts are a straightforward estate planning tool and can be used whether or not a will or trust is in place.
How does a payable on death account work if I do not leave a will or trust?
The payable on death accounts will pass to the named beneficiaries without any court involvement or other probate procedures, even if there is no will or trust and even if there are other accounts that require court involvement.
Tip: An individual may use payable on death accounts together with other non-probate planning tools (like Transfer on Death Deeds, and Motor Vehicle Beneficiary Designations, for example) as one way of planning for your beneficiaries to not have to go to court on your death.
How does a payable on death account work if I leave a will or trust?
People with a will or trust also use payable-on-death bank accounts. In this case, the payable-on-death bank accounts pass to the named beneficiary without looking to the will or trust.
- An individual might want to leave some accounts to be controlled by their will or trust, and other accounts to pass to a named beneficiary directly.
- Even if you leave instructions for gifts in your will, and even if the will conflicts with your POD designation, the payable-on-death bank account will control who receives the POD account funds.
- Having a will as an additional estate planning tool is a good idea for many people. If you have minor children or descendants, disabled or incapacitated beneficiaries, or want peace of mind that the people you choose will receive the property you leave on your death, talk with a lawyer about setting up a will.
Does it cost anything to have a payable on death bank account?
No. Making the designation of a payable on death beneficiary is free both to the account holder, and to the named beneficiary.
How do I set up my account as a payable on death bank account?
Simply ask the bank who is holding your money to provide you with the forms for naming a payable on death beneficiary for your account.
The bank will ask you to verify and sign paperwork confirming that it has recorded the beneficiary or beneficiaries of your choice.
When is it not a good idea to have a payable on death bank account?
Sometimes accounts should not be set up as payable on death to certain beneficiaries.
This might be the case if your beneficiary will need help managing the money because they are:
- disabled and receive governmental assistance that could be affected by a direct gift, or
- a minor who cannot receive the funds directly.
Talk with a lawyer if you have questions concerning leaving money to a beneficiary in a payable-on-death account.
What happens if I change my mind on who I want my funds to go to on my death?
The decision on who to name as your payable-on-death beneficiary is not permanent and does not cost anything to change.
As long as you are alive and capacitated, you can easily change your named beneficiary in a payable-on-death account.
Can my payable on death beneficiary access my funds while I am still alive?
No. Making a payable on death beneficiary designation does not authorize the named beneficiary to access your funds during your life and does not give your beneficiary any control or access to the account during your lifetime.
How does my beneficiary get the money from my payable on death bank account on my death?
A beneficiary simply provides the bank with a copy of your death certificate, and the funds will be transferred into your beneficiary’s name.
Transfer on Death Deeds
The deceased person's property may sometimes pass without the need for a formal court proceeding.
Understand laws about what happens to your property after you die.
Not all of a deceased person's property and debt have to be distributed through court.
This article discusses appointing someone to handle your remains after death.
This article explores ways to own property and plan for the future to minimize the need for probate.