In recent years, many banks and other financial institutions have begun to offer depositors the chance to transform a checking account into a payable-on-death (POD) account by naming a beneficiary. While the practice has advantages and disadvantages, it is not mandatory. No law requires a checking account holder to name a beneficiary.
Passing With Estate
Even if you only keep enough in your checking account to pay this month's bills, the money is your property and, if you die, passes to your beneficiaries. Generally, bank accounts are part of the estate of a deceased. That means that if you have a will, the money passes to the beneficiaries you name in the will. If you have no will, it passes with the rest of your estate to close family members under the state's intestate laws.
Passing Under Beneficiary Designation
If you accept the bank's offer to name a beneficiary to whom your funds pass on your death, the amount in your checking account does not become part of your estate. Instead, it passes directly to the person named. While this is an easy way to designate a beneficiary, it also is easy to forget to update the beneficiary form after important life events like a marriage, divorce or the birth of a child.