Who Gets My Bank Account When I Die?

Investopedia’s recent article, “What Happens to Your Bank Account After Death?” details the common ways you can set up your account to make things as simple as possible after your passing and what will happen if you don’t set up anything beforehand.

The easiest way to pass your bank account on to your heirs after your passing is to make sure you name payable-on-death (POD) or transfer-on-death (TOD) beneficiaries on your accounts. This ensures that they won’t have to go through probate. When you name a payable-on-death beneficiary, they won’t have direct access to your money until you die. You can change the named payable-on-death beneficiary at any time.

A bank will frequently freeze an account upon notification of the holder's death to prevent fraud. Therefore, it's important to have a payable on death (POD) beneficiary designated to ensure that your loved ones can access your money if you pass away.

Adding account holders to your bank accounts can make things easier for your heirs after your passing. However, it can have downsides while you are living. Note that most joint account holders are considered joint tenants with rights of survivorship (JTWROS). That means the account passes to the survivor(s) when an account holder dies.

The other people on your account may also be subject to gift tax and can withdraw funds from the account whether or not you want them to. The assets in the account are legally considered theirs to qualify for government programs or if they have a creditor with a judgment against them.

If you don’t set up anything before your passing, your accounts will go to probate and be distributed according to state probate law. Without a will, an executor will be appointed who will be responsible for paying off any creditors of the deceased. The remaining money will be distributed to the spouse and children of the decedent.

However, if the deceased has named a payable-on-death (POD) beneficiary for the account, they will get access to it immediately. They simply need to show the bank a death certificate and identification.

If you have a simple estate with no assets besides a bank account, adding a payable-on-death beneficiary to your account(s) is the easiest way to avoid probate. Ask an experienced estate planning attorney for assistance.

Reference: Investopedia (June 13, 2023) “What Happens to Your Bank Account After Death?”

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