Yes, you can name a beneficiary on most bank accounts, and it bypasses probate
You can name a beneficiary on a bank account — a person or organization who receives the money in that account when you die. The account passes directly to them outside of probate, meaning no court process and no waiting. The money moves faster than it would through your will.
Not every account type allows this. Checking and savings accounts almost always do. Money market accounts usually do. Certificates of deposit (CDs) typically do. But the exact rules depend on your bank and the account structure, so you need to ask your bank directly what they offer.
The beneficiary designation overrides your will. If your will says your brother gets the account but you named your sister as beneficiary, your sister gets it. This matters if your situation has changed since you last updated your will.
Key Takeaways
- Most banks allow you to name a beneficiary on checking, savings, and CD accounts, and the money passes directly to them when you die without going through probate.
- The beneficiary designation overrides what your will says, so if you have both a will and a named beneficiary, the beneficiary wins.
- You can usually name multiple beneficiaries and decide what percentage each one receives, or name a backup beneficiary in case your first choice dies before you do.
- You update or change a beneficiary by contacting your bank directly — there is no standard form across all banks, and some require you to visit a branch in person.
- If you die without naming a beneficiary, the account becomes part of your estate and goes through probate or passes under your state's intestacy laws.
How beneficiary designations work at the bank level
When you name a beneficiary, you are creating what the bank calls a payable-on-death (POD) account or a transfer-on-death (TOD) account, depending on your bank's terminology. The account still belongs to you while you are alive. You control the money, you can spend it, you can change the beneficiary. The beneficiary has no rights to the account until you die.
After you die, the person handling your estate (your executor or next of kin) notifies the bank with a copy of your death certificate. The bank verifies the beneficiary's identity and transfers the money directly to them. This usually takes one to three weeks, much faster than probate, which can take months or years.
The money in a POD account does not count against your beneficiary's taxes or benefits in most cases. It also does not go through probate, so creditors cannot claim it the way they might claim other assets in your estate. This is one reason people use POD accounts alongside a will.
Types of beneficiary arrangements you can set up
Most banks let you name a primary beneficiary — the person who gets the account if you die. You can also name a contingent beneficiary (or backup beneficiary) — someone who gets the money only if your primary beneficiary dies before you do.
You can name multiple primary beneficiaries and split the account between them. You decide the percentage each one receives. For example, you could say 60 percent goes to your daughter and 40 percent goes to your son. If one of them dies before you, most banks will split their share among the surviving beneficiaries unless you specify otherwise.
Some banks allow you to name an organization as beneficiary — a charity, a school, or a nonprofit. The rules vary by bank and by the type of organization, so ask your bank whether they support this.
How to name or change a beneficiary at your bank
Contact your bank directly and ask for the beneficiary designation form. There is no standard form across all banks — each one has its own process and paperwork. Some banks let you do this online through your account portal. Others require you to call and speak to someone. Some require you to visit a branch in person and bring identification.
You will need the beneficiary's full legal name and usually their Social Security number or tax ID. If you are naming a minor, some banks require you to name a guardian or custodian who will manage the money until the child reaches adulthood. Ask your bank what they require for minors.
Once you submit the form, the bank updates their records. You should receive a confirmation. Keep a copy for your records. If you want to change the beneficiary later, contact the bank again — the process is the same.
What happens if you do not name a beneficiary
If you die without naming a beneficiary, the account becomes part of your estate. It goes through probate (if your estate is large enough to require it) or passes under your state's intestacy laws (the default rules for who inherits when there is no will). Either way, it takes longer and costs more than a direct transfer to a named beneficiary.
Your state's intestacy laws usually give the money to your spouse first, then your children, then your parents, then your siblings — but the exact order depends on your state. If you have no family, the money may go to the state. This is why naming a beneficiary is useful even if you have a will.
Beneficiary designations and your will
A beneficiary designation is separate from your will. They do not have to match. But if they conflict, the beneficiary designation wins. The bank will pay the named beneficiary regardless of what your will says.
This can create problems if your life has changed. For example, if you named your ex-spouse as beneficiary years ago and forgot to change it after the divorce, your ex-spouse will still get the account when you die — your will cannot override that. This is why it is important to review your beneficiary designations whenever your life changes: after a marriage, a divorce, a birth, or a significant change in your finances.
You should keep your will and your beneficiary designations in sync. If you want your estate to be divided equally among your children, make sure your bank accounts, retirement accounts, and insurance policies all reflect that. If they do not, some of your children may get more than others.
Beneficiary designations on retirement accounts and insurance
Retirement accounts like IRAs and 401(k)s also use beneficiary designations, and they work the same way: the named beneficiary gets the money outside of probate. Insurance policies also use beneficiary designations. The rules are similar, but the tax treatment can be different — especially for retirement accounts, where the beneficiary may owe income tax on the money they receive.
If you have multiple accounts with beneficiary designations, make sure they all reflect your wishes. It is straightforward to name one beneficiary on your bank account, a different one on your IRA, and a third one on your life insurance, and then wonder why your estate is divided unevenly. Sit down with a list of all your accounts and review who is named on each one.
Frequently Asked Questions
Can I name a minor as beneficiary?
Yes, but most banks require you to name a guardian or custodian to manage the money until the child reaches adulthood (usually 18 or 21, depending on your state). Without a guardian, the bank may not release the money to a minor. Ask your bank what they require and whether they offer custodial accounts for this purpose.
What if my beneficiary dies before I do?
If you named a contingent beneficiary, they get the account. If you did not, the account becomes part of your estate and goes through probate or passes under your state's intestacy laws. This is why naming a backup beneficiary is useful — it ensures the money goes where you want it to even if your first choice dies before you do.
Can I change my beneficiary after I name one?
Yes. Contact your bank and ask for the beneficiary change form. The process is the same as naming a beneficiary the first time. You can change it as many times as you want while you are alive. Once you die, the designation is locked in.
Does naming a beneficiary affect my taxes?
Not while you are alive. The account is still yours and you pay taxes on any interest it earns. After you die, your beneficiary may owe income tax on the interest earned since your death, depending on the account type and the amount. Retirement accounts have different rules — ask a tax professional about the tax impact on your beneficiary.
What if I want to leave money to a charity?
Many banks allow you to name a nonprofit organization as beneficiary. You will need the organization's legal name and tax ID number. Some banks have restrictions on what types of organizations they accept, so ask your bank whether they support charitable beneficiaries and what documentation they need.