POD stands for "Payable on Death" and lets you name someone to inherit money in your account without going through probate
A POD designation is an instruction you give your bank that says: when I die, transfer the money in this account directly to the person I name. The bank holds the money in your name while you're alive. After you die, the bank releases it to your POD beneficiary without waiting for a will to be read or a court to approve the transfer. The money bypasses probate entirely.
You can add a POD to most savings accounts, money market accounts, and certificates of deposit (CDs). Checking accounts vary by bank—some allow it, some don't. You cannot use POD on investment accounts or retirement accounts like IRAs, which have their own beneficiary rules.
The person you name as POD beneficiary has no claim to the money while you're alive. You can spend it, move it, or close the account whenever you want. The POD only activates after you die, and only if there's money left in the account.
Key Takeaways
- POD is a free, simple way to pass money to one person without probate, and you keep full control of the account while alive.
- You name the beneficiary directly through your bank—no lawyer or court involvement needed to set it up.
- The money goes to your POD beneficiary only after you die and only if the account still has funds in it.
- POD works on savings accounts, money market accounts, and CDs, but not on checking accounts at most banks or on retirement accounts.
- If you name multiple POD beneficiaries, the money is usually split equally among them unless you specify otherwise.
How to set up a POD on your account
Contact your bank and ask to add a POD designation to the account. You'll need to provide the beneficiary's full legal name and, at most banks, their Social Security number. Some banks let you do this online, by phone, or in person. A few require you to fill out a form and sign it in front of a bank employee.
There is no cost. The bank will confirm the designation in writing and keep it on file. You can change or remove the POD beneficiary at any time by contacting the bank again—you don't need the beneficiary's permission.
If you want to name more than one beneficiary, tell the bank how you want the money split. If you don't specify, most banks divide it equally. For example, if you name two people and don't say otherwise, each gets half.
The difference between POD and joint account ownership
A joint account gives another person access to your money right now. They can withdraw, spend, or move the money while you're alive. A POD account keeps the money in your name alone until you die, and the beneficiary cannot touch it.
With a joint account, if the other person dies first, the money usually goes to you automatically (depending on how the account is titled). With POD, if your beneficiary dies before you, the money stays in your account and goes to your estate when you die—unless you name a backup beneficiary.
Joint accounts are useful if you want someone to help manage your money or pay bills while you're alive. POD is useful if you want someone to inherit the account but don't want them to have access to it now.
What happens to a POD account after you die
After you die, your beneficiary contacts the bank with a death certificate and proof of identity. The bank verifies the information and transfers the money to the beneficiary. This usually takes one to four weeks, depending on the bank and whether the account is straightforward.
The money does not go through your will or probate. It is not part of your taxable estate for federal tax purposes (though state laws vary). The beneficiary receives it as a direct transfer, not as an inheritance.
If you name multiple beneficiaries and one dies before you, that person's share stays in the account and goes to your estate unless you update the designation. If all your beneficiaries die before you, the money stays in your account and is distributed according to your will or state law.
POD vs. transfer on death (TOD) accounts
Transfer on Death (TOD) is the same concept as POD but usually applies to investment accounts and brokerage accounts instead of bank accounts. Some banks and brokerages use the term TOD instead of POD, and some use both interchangeably. The mechanics are identical: you name a beneficiary, the account stays in your name while you're alive, and the money transfers directly to the beneficiary after you die without probate.
Check with your specific bank or brokerage about which term they use and which accounts support the feature. The important thing is whether the institution offers it at all—not all do.
Limits and things to know about POD accounts
POD does not reduce your taxes. The money in the account is still part of your taxable estate if your total estate is large enough to owe federal estate tax. However, most estates do not owe federal tax because the threshold is very high (over $13 million in 2023, though this changes by year).
POD does not protect the money from creditors. If you owe money when you die, creditors can make claims against the account before the beneficiary receives it. The order of payment depends on state law and the type of debt.
You cannot use POD to avoid probate on everything. If you have a will, a house, or other assets, those still go through probate. POD only covers the specific account you designate it on.
If you receive means-tested benefits like Medicaid or Supplemental Security Income (SSI), naming a POD beneficiary does not affect your benefits while you're alive. However, if the beneficiary is a spouse or dependent, the money they receive after you die might affect their benefits. Talk to a benefits counselor before setting up POD if you or your beneficiary receive government assistance.
When POD is useful and when it is not
POD works well if you have a savings account or CD with money you want one specific person to inherit, and you want to avoid probate for that account. It is fast, free, and requires no paperwork after you set it up.
POD is less useful if you have a complex estate, multiple heirs you want to treat differently, or if you want to leave money to a minor (the minor cannot access the money until they reach adulthood, and you may need a guardian or trust to manage it). In those cases, a will or trust written by a lawyer is usually better.
POD is also not a substitute for a will. Even if you use POD on your bank account, you should still have a will to cover everything else—your house, your car, your personal items, and who raises your children if you have them.
Frequently Asked Questions
Can I name a minor as my POD beneficiary?
Yes, but the minor cannot access the money until they reach adulthood (usually 18 or 21, depending on your state). The money may be held by the bank or transferred to a court-appointed guardian. Consider naming an adult to manage the money for the minor, or set up a trust instead.
What if I change my mind about who I named as POD beneficiary?
Contact your bank and ask to change or remove the POD designation. You do not need permission from the current beneficiary. The bank will update your account and send you written confirmation. The change takes effect immediately.
Does the POD beneficiary have to pay taxes on the money they receive?
No. Money transferred through POD is not taxable income to the beneficiary. However, if the account earned interest before you died, that interest may be taxable to your estate. Your bank will send a tax form to your estate if interest was earned.
Can I use POD on a joint account?
It depends on the bank and how the account is titled. Some banks allow POD on joint accounts; others do not. Ask your bank directly. If both joint owners die, the POD beneficiary receives whatever money is left.
What if I die without naming a POD beneficiary?
The money in the account becomes part of your estate and is distributed according to your will or, if you have no will, according to your state's intestacy laws. This process goes through probate and takes longer than POD.