Creating a Beneficiary on Your Savings Account




One of the most frustrating aspects of inheritances is the necessity of probate. The more items and assets caught up in probate, the longer it will be before your loved ones receive the items you designate for them upon your death. One of the best ways to get around this problem is to create situations where your money and assets bypass probate. For example, creating a beneficiary for your savings account would do the trick.

When you open a savings account, the bank doesn't automatically ask you for a beneficiary, and the default is often the bank itself until probate works itself through the will. This means that the bank continues to earn interest from your money while your children or other loved ones are waiting for their shares. Creating a beneficiary on your savings account means that the balance left goes directly to the person you name at the bank.


Related Reading: Inheritance loans, real estate investing, executors, avoiding probate and alternatives.

While many things are difficult when planning your estate, this isn't one of them. All you have to do is go to your bank and ask them to put down a beneficiary for your account. This doesn't mean that the person you name becomes an account holder - such as with a joint savings account. Instead, he or she cannot access the funds until and unless you pass on. This is an effective way to responsibly plan for the future of your family and friends.


In order to create a beneficiary on your savings account, you'll need some personal information about the person you want to name. For identification purposes, the bank will want his or her name, address, phone number, social security number and often driver license number. This is to avoid false claims after you pass on. You can either collect that information from your loved one and take it to the bank, or you can bring him or her to the bank with you.


In most cases, the bank will place a POD designation on your account, which stands for Payable On Death, and serves as an indication of a beneficiary. When the designation is placed, the loved one you name will automatically inherit the money in the account when you die. In some cases, you can do the same thing with your check, money market, C.D., and mutual fund accounts, but you'll have to check with your personal banker.


Some people choose to add a joint ownership to their savings account rather than a beneficiary, but this is problematic for two reasons. First, a joint account holder is not automatically the beneficiary, which is confusing for most people when they first start examining their own affairs. Often, the banks will leave the default on the account, which means that the joint account holder won't have access to the funds until after probate. Second, this gives the other person immediate and unlimited access to your funds.


If you just create a beneficiary, however, your savings account will remain in your name only, and you'll be solely responsible for the funds. This is usually the safest route, even if you trust the other person implicitly.