A POD account lets you name someone to inherit the money in it when you die, without that money going through probate

POD stands for "payable on death." It is a designation you add to a bank account—checking, savings, or money market—that automatically transfers the account balance to a named person when you pass away. The account works like any other account while you are alive. You can withdraw money, deposit money, and use it normally. The POD designation only activates after death.

The person you name is called the POD beneficiary. They have no access to the account while you are alive, even if they know about it. When you die, the bank verifies your death and releases the funds directly to the beneficiary. This transfer happens outside of probate, meaning it does not go through the court process that normally handles your estate.

POD accounts are sometimes called Totten trusts, especially in older legal documents. The mechanics are the same: you own and control the account during your lifetime, and it passes to your named beneficiary at death.

Key Takeaways

  • A POD account transfers its balance directly to a named beneficiary when you die, bypassing probate court.
  • You retain full control of the account while alive—the beneficiary cannot access it or make decisions about it.
  • Most banks offer POD designations at no extra cost, and you can change or remove the beneficiary at any time.
  • POD accounts work for checking, savings, and money market accounts but not for investment accounts like brokerage or retirement accounts, which use different transfer methods.
  • The beneficiary receives the funds tax-free, though the account balance may be counted as part of your taxable estate if it is very large.

How a POD account is set up

You set up a POD designation when you open the account or add it to an existing account. At the bank, you will fill out a form that asks for the beneficiary's full legal name, date of birth, and Social Security number or tax ID. Some banks let you do this online; others require you to visit a branch or mail in a form.

There is no cost to add a POD designation. You can name one person or multiple people. If you name multiple beneficiaries, you specify how the money divides—equally, or in percentages you choose. If one beneficiary dies before you do, the funds go to the surviving beneficiaries in the proportions you set, unless you have named an alternate.

You can change the beneficiary at any time by contacting the bank and updating the designation. The bank will ask you to sign a new form. This change takes effect when ready, so make sure you understand which version is current if you have made updates over time.

POD accounts versus joint accounts with survivorship rights

A joint account with survivorship rights (also called a joint tenancy account) is different from a POD account, though both pass money outside probate. In a joint account, both owners have full access and control while alive. When one owner dies, the surviving owner automatically owns the entire account.

In a POD account, only you have access while alive. The beneficiary is a named heir, not a co-owner. This matters if you are concerned about the other person spending the money before you die, or if you want to keep the account separate from their finances.

Joint accounts also carry a risk: if the other owner is sued or has creditors, those creditors may be able to reach the joint account. A POD account is only exposed to creditors during your lifetime, not after death—the beneficiary receives the funds free and clear.

What happens to a POD account after you die

When you die, the bank will need proof of death—usually a certified copy of your death certificate. The beneficiary or your executor can provide this. The bank then verifies the death and releases the funds to the beneficiary. This process typically takes one to three weeks, depending on the bank and how quickly the death certificate is obtained.

The beneficiary does not owe income tax on the money they receive from a POD account. However, if the account earned interest or dividends before your death, that income is taxable to your estate in the year you died. The beneficiary will receive a 1099-INT or similar form showing any interest earned.

For federal estate tax purposes, the balance in a POD account is counted as part of your estate if your total estate is large enough to trigger estate tax. This is a concern only if your estate exceeds the federal exemption threshold, which changes yearly and is currently over $13 million for individuals. Most people do not have estates large enough for this to matter.

POD accounts do not work for all account types

Banks offer POD designations for deposit accounts: checking, savings, and money market accounts. They do not offer POD for investment accounts like brokerage accounts, mutual fund accounts, or certificates of deposit (CDs) held at investment firms.

If you have stocks, bonds, or mutual funds, you can name a beneficiary using a different method called transfer on death (TOD) registration, which works the same way as POD but is used by investment firms. Retirement accounts like IRAs and 401(k)s have their own beneficiary designation process, separate from both POD and TOD.

If you are unsure whether your account can have a POD designation, ask the bank or financial institution directly. They will tell you what options are available for that specific account type.

Limits and things to know about POD accounts

A POD account must be in your name alone or in your name with survivorship rights. You cannot set up a POD account in someone else's name, and you cannot make a POD account a joint account with survivorship rights at the same time—the two methods conflict.

If you name a minor as the POD beneficiary, the funds will go to them when you die, even if they are still a child. Some banks will hold the money in trust until the beneficiary reaches the age of majority (usually 18 or 21, depending on your state). Check with your bank about their policy if this is your situation.

If your POD beneficiary dies before you do and you have not named an alternate, the account will be treated as part of your regular estate and go through probate. This is why it is worth reviewing your POD designations every few years, especially after major life changes.

When a POD account makes sense

A POD account is useful if you want a straightforward way to pass money to one or a few people without probate. It works well for a spouse, adult child, or trusted family member. It is also useful if you have a modest amount of money in a single account and want to avoid the cost and delay of probate.

POD accounts are less useful if your finances are complex—if you have multiple accounts, significant assets, or minor children who need a guardian. In those cases, a will or trust (or both) gives you more control over how your money is distributed and who manages it.

A POD account can work alongside a will or trust. You might use a POD for a checking account and a trust for your house and investments. The two do not conflict as long as you are clear about which assets are covered by which method.

Frequently Asked Questions

Can I change my POD beneficiary after I set it up?

Yes. Contact your bank and ask to update your POD designation. You will sign a new form, and the change takes effect when ready. The old beneficiary has no claim to the account once you have made the change.

What if I name multiple POD beneficiaries?

You can name as many as you want and specify how the money divides. If you name three people and say each gets one-third, they each receive one-third when you die. If one dies before you, the remaining two split the account according to your original percentages, unless you have named an alternate beneficiary.

Does the POD beneficiary pay taxes on the money?

The beneficiary does not owe income tax on the account balance itself. However, any interest or dividends earned before your death are taxable income to your estate in the year you died. The beneficiary receives a tax form showing this income.

What happens if I die without naming a POD beneficiary?

The account becomes part of your regular estate and goes through probate. Your state's intestacy laws determine who inherits it—usually your spouse or children, depending on who survives you.

Can creditors take money from a POD account after I die?

Generally, no. Once the funds are released to the beneficiary, they are protected from your creditors. However, if your estate does not have enough other assets to pay debts, a creditor may be able to go after the POD account before it is released to the beneficiary. This is rare and depends on your state's laws.