POD stands for "Payable on Death" and lets you name someone to inherit money in your account when you die
A POD designation is an instruction you give your bank that says: when I die, transfer the money in this account to the person I name. The person you name is called the POD beneficiary. The money bypasses your will and goes directly to them, which usually happens faster than money that goes through probate.
You set up a POD when you open the account or add it to an existing account. It costs nothing. The beneficiary has no access to the money while you are alive — you control the account completely. When you die, the bank verifies your death and releases the balance to whoever you named.
POD is different from making someone a joint owner of the account. A joint owner can withdraw money right now. A POD beneficiary cannot touch the account until after you die and the bank is notified.
Key Takeaways
- POD means the account automatically transfers to a named person after you die, without going through your will or probate court.
- You keep full control of the account while alive — the beneficiary cannot access it, and you can change or remove the designation anytime.
- The bank needs a copy of your death certificate to release the money, which usually takes a few weeks after notification.
- POD works on savings accounts, checking accounts, and money market accounts, but not on retirement accounts like IRAs or 401(k)s, which have their own beneficiary rules.
How to set up POD on a bank account
When you open a new account, the bank will ask if you want to name a POD beneficiary. You provide their full legal name and usually their Social Security number or date of birth. Some banks ask for their address as well. Write down exactly what the bank requires — if the name does not match their identification later, the bank may not release the money.
If you already have an account and want to add POD, call your bank or visit a branch and ask for a beneficiary designation form. Fill it out with the beneficiary's information, sign it, and return it to the bank. The bank will confirm in writing that the designation is in place. Keep that confirmation in your records.
You can name one person or multiple people. If you name multiple beneficiaries, specify how the money should split — for example, 50% to your daughter and 50% to your son. If you do not specify, the bank's rules determine the split, which is usually equal shares.
What happens to the money after you die
When you die, someone — usually a family member or the executor of your estate — notifies the bank and provides a death certificate. The bank verifies the death and confirms the POD beneficiary information in their records. This process usually takes one to three weeks, though it can be faster if the beneficiary contacts the bank immediately.
The bank then releases the account balance to the beneficiary. The beneficiary may receive a check, a wire transfer, or the option to open a new account and have the money deposited there. Some banks allow the beneficiary to withdraw the money in person at a branch.
The money in a POD account does not go through probate, which means it does not have to wait for a court to approve your will. This is one reason people use POD — it gets money to family members faster than the normal estate process.
POD versus joint accounts and other transfer methods
A joint account has two or more owners who can both access and withdraw money right now. When one owner dies, the surviving owner usually keeps the account and the money automatically. The difference: with a joint account, the other person can spend your money while you are alive. With POD, they cannot.
A transfer on death (TOD) account is similar to POD but is used for investment accounts and securities, not bank accounts. The mechanics are the same — the account goes to a named person after you die — but the term TOD is used for stocks and bonds, while POD is used for cash accounts.
A beneficiary designation in your will names someone to receive money from your estate, but it goes through probate court first. This takes longer and costs more than POD. Many people use both: POD for bank accounts (which transfer fast) and a will for other property.
Can you change or remove a POD beneficiary
Yes. You can change the beneficiary anytime while you are alive. Contact your bank, ask for a new beneficiary designation form, fill it out with the new person's name, sign it, and return it. The bank will update their records. The old beneficiary has no claim to the money once you change the designation.
You can also remove the POD designation entirely, which means the account will go through your will or to your estate when you die. Ask the bank for a form to remove the beneficiary designation, sign it, and return it.
Keep copies of all beneficiary forms you sign. If there is ever a dispute about who you named, the bank's records are the official version, but your copy proves what you intended and when you made the change.
What does not work with POD
POD does not work on retirement accounts like IRAs, Roth IRAs, 401(k)s, or 403(b)s. Those accounts have their own beneficiary designation process, and you must name a beneficiary through the plan administrator, not the bank. If you have a retirement account, check with your employer or the plan provider to see who is currently named.
POD also does not work on accounts held in a trust. If your account is titled in the name of a trust, the trust rules determine where the money goes, not a POD designation. Similarly, if you are a minor, you cannot set up POD on your own — a parent or guardian must do it.
Some banks do not offer POD on all account types. Money market accounts usually allow it, but some specialty accounts may not. Ask your bank which accounts support POD before you open one.
Taxes and POD accounts
The money in a POD account is part of your taxable estate for federal estate tax purposes, even though it does not go through probate. If your total estate is large enough to owe federal estate tax, the POD account counts toward that total. Most people do not owe federal estate tax — the threshold is very high — but it is worth knowing if you have a large estate.
The beneficiary does not owe income tax on the money they receive from a POD account. It is not considered income to them; it is an inheritance. However, if the account earned interest before you died, that interest may be taxable to your estate, depending on how much it was.
Some states have inheritance taxes that apply to money received from POD accounts. Check your state's rules or ask a tax professional if you live in a state with an inheritance tax.
Frequently Asked Questions
Can the POD beneficiary access the account before I die?
No. The beneficiary has no access to the account while you are alive, even if they know about the designation. You have complete control. The money only transfers after you die and the bank is notified with a death certificate.
What if I die without naming a POD beneficiary?
The money in the account becomes part of your estate and goes through probate. It will be distributed according to your will, or if you have no will, according to your state's intestacy laws. This process takes longer and costs more than POD.
Can I name a minor as a POD beneficiary?
Yes, but the bank will not release the money directly to a minor. When you die, the money will be held until the minor reaches the age of majority (usually 18 or 21, depending on your state), or a court-appointed guardian can access it on their behalf.
What if my POD beneficiary dies before I do?
The money does not automatically go to the beneficiary's heirs. Instead, it becomes part of your estate and is distributed according to your will or your state's intestacy laws. Update your POD designation if your beneficiary dies.
Do I need a lawyer to set up POD?
No. You can set it up yourself by contacting your bank and filling out their beneficiary designation form. It is free and takes a few minutes. A lawyer is not needed unless your situation is complex, such as a large estate or multiple beneficiaries with specific instructions.