What Happens to a Bank Account When Someone Dies?

Banks typically don’t require you to name a beneficiary when you open a checking or savings account. It’s often up to you to initiate the process, and doing so may be a good idea. Without a beneficiary, the funds in a bank account typically become part of the deceased person’s estate. This means they have to go through a longer process (called probate) before any heirs may receive the money.

Read on for a deeper look into what happens to a bank account when someone dies and how to add a beneficiary to a bank account.

What Is a Bank Account Beneficiary?

A beneficiary for a bank account is a person or entity the account holder has chosen to receive the assets in the account upon their death.

As an account holder, you may name one or several beneficiaries. If you pick more than one, the assets in your checking or savings account may be divided equally among all the beneficiaries. Or you might decide to allocate the funds in a different way, such as 60% to one beneficiary and 40% to another. You may also be able to designate a contingent beneficiary for each beneficiary — someone who may receive the money if the primary beneficiary is no longer alive or is unable to receive the funds.

How to Add a Beneficiary to a Bank Account

Banks typically don’t require you to name a beneficiary when you open a new bank account, so you may not have any listed for your accounts. To add a beneficiary, you may simply contact your bank and ask if it’s possible to designate a beneficiary on your accounts. 

The bank is likely to provide you with a beneficiary designation form (called a "Totten trust") to fill out. This authorizes the bank to turn your account into a payable-upon-death (POD) account, which means the account’s funds may pass directly to any named beneficiaries after your death.

To add beneficiaries, you may need to provide the person’s full name, address, and birthdate, as well as their Social Security number or tax identification number and country of citizenship. Depending on the bank, you may be able to fill out this form online. 

Once you name one or more beneficiaries, it may be a good idea to review your designations at least once a year to ensure you’re still happy with your choices. Keep in mind that even if you change your will in the future, the beneficiaries named on your bank accounts may take precedence over those named in your will. 

What Are the Requirements to Be a Beneficiary?

There are generally no requirements to be a beneficiary. The beneficiary of your checking account or savings account may be your best friend, cousin, sibling, or child (though minors may need a guardian or trustee to manage the funds until they reach legal adulthood). 

You may even pick entities and organizations, such as your favorite charity or nonprofit organization (provided they are recognized by the Internal Revenue Service as a charitable organization) as a bank account beneficiary.

Recommended: Guide to High-Yield Savings Accounts

What Happens if No Beneficiary Is Named on a Bank Account?

Exactly what happens if you die and there is no beneficiary named on the account typically depends on the type of bank account. 

If it’s a joint account, the co-owner of the account usually becomes the sole owner of the account since joint accounts typically have automatic rights of survivorship. This means that the surviving account holder is able to use the account as they wish, including the money held in the account.

If it’s not a joint account and there are no named beneficiaries, then the funds held in your account may go to your estate. All the assets in an estate need to go through probate before anyone may inherit the money. 

Probate is a legal proceeding in which the court supervises how the assets of your estate are distributed. This process is complicated and typically takes six months to two years, potentially longer if your estate is complex or someone contests the will. During that time, the money in the bank account could end up going towards paying the estate’s debts instead of going to your heirs. 

What Are a Beneficiary's Rights?

Your beneficiaries won’t have any rights or access to your bank account while you’re alive (unless it’s a joint account). That means you may do as you wish with your account, whether it’s making deposits or withdrawals or closing the account altogether. The only change you might see after naming beneficiaries is that the account is now referred to as an “in trust for” or ITF account.

When Can an Account Be Claimed by a Beneficiary?

A beneficiary may only claim the funds in your account once you pass away. At that point, they may need to provide the bank with a certified copy of the death certificate and personal identification and fill out a few forms. The bank may then transfer ownership of the account without any need to wait for probate. However, depending on what state you live in, there may be a brief waiting period before the bank makes the transfer.

Recommended: ​​Guide to Transferring Money Between Banks 

POD or Payable-on-Death Accounts

To name a beneficiary to a checking or savings account, you need to convert the account into a POD account. A POD account is, essentially, an informal trust: a legal construct that shelters assets from probate after death. Once you fill out the beneficiary forms, the account is typically considered a POD account. These accounts may also be called “In Trust For (ITF),” “Totten Trust,” or “Transfer on Death” accounts.

The Takeaway

Naming a beneficiary on your bank account is a common way to avoid probate and give your heirs access to funds quickly. It doesn’t take long to name a beneficiary, and the benefits may have far-reaching consequences, such as loved ones not having to wait months or potentially years for access. 

You may add beneficiaries to a savings or checking account you already own. If you’re looking for a new bank, you may be able to add beneficiaries as part of the account application process, or you may be able to do it right after you open the account.

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