Do You Have to Have a Beneficiary for a Checking Account?

By Teo Spengler

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.

Divorce is never easy, but we can help. Learn More
Divorce is never easy, but we can help. Learn More
How to Retitle an IRA When a Successor Beneficiary Inherits the IRA
 

References

Resources

Related articles

How Does an Estate Treat an IRA?

An IRA is a unique creature when it comes to an estate inheriting the IRA or having to pass it along to beneficiaries. If the IRA names a beneficiary, the estate can simply pass along ownership of the account. However, if the decedent didn't name a beneficiary, the tax rules are more complicated.

Do IRAs Override a Last Will & Testament?

The beneficiary form you complete when you open an IRA is like a “mini-will” for your retirement account. Because your IRA comes with its own built-in beneficiary, it doesn’t need to pass to beneficiaries through your will; it goes directly to the named beneficiary and bypasses the probate process. Failure to name or update a beneficiary can have severe financial consequences for those who eventually end up owning the IRA.

Can a Revocable Trust Be the Beneficiary of a Personal Bank Account?

Beneficiaries are those who inherit accounts or receive assets when you die. When you name a beneficiary, you give that individual or entity a legal claim that overrides anything you've set out in a will. You also allow the beneficiary to avoid the whims, costs and delays of a probate court proceeding. Beneficiary designations must be handled with care, and a regular review of who is supposed to get what, and when, is a smart financial play.

Get Divorced Online

Related articles

No Beneficiary Life Insurance Laws in Ohio

There’s no law that says you must name a beneficiary on your life insurance policy, but if you don’t, state law can get ...

Is Life Insurance Part of an Estate If Not Listed in a Will?

Life insurance is only part of an estate if the policy is not left to a designated beneficiary. It does not matter if ...

What Is the Law for Beneficiary Designation for Bank Accounts?

Planning for distribution of your assets after your death can be a complex and confusing process. Naming beneficiaries ...

Transfer on Death Vs. Beneficiary

It can take years to settle a decedent’s estate through probate, and the executor usually can’t transfer any of the ...

Browse by category
Ready to Begin? GET STARTED