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Understanding Beneficiaries on Savings Accounts

Have you ever wondered what happens to your savings account when you pass away? It’s important to know that you can designate a beneficiary—or multiple beneficiaries—on most savings, checking, and retirement accounts. By naming a beneficiary, your money will be transferred directly to that person upon your death.

Can You Have a Beneficiary on a Savings Account?

Yes, you can add a beneficiary to your savings accounts, including high-yield savings accounts, money market accounts, and certificates of deposit (CDs). Designating a beneficiary instructs your bank or credit union on how to distribute your money when you pass away. While financial institutions don’t require you to name a beneficiary, doing so ensures that your money goes to your preferred heir(s) and avoids being tied up in probate. Adding a beneficiary is typically free and does not grant them access to your money or account information while you’re alive.

Do You Need a Beneficiary if You Have a Joint Account?

A joint account usually passes to the surviving account holder(s) when one account holder dies. However, you may still want to name a beneficiary to determine who receives the money when all parties on the account are deceased.

Reasons to Add a Savings Account Beneficiary

The primary reason to add a beneficiary to your savings account is to avoid probate, a legal process for transferring property after a person passes away. Probate can take a year or more, delaying access to assets your heirs may need to cover expenses. Naming a beneficiary for your account does not replace having a will or living trust, especially if you have real estate or personal property to pass down. Financial institutions often prioritize beneficiary instructions over a will, as these instructions are part of your banking contract.

How to Name a Beneficiary on a Savings Account

The process may vary slightly between financial institutions. At some banks, an account with a beneficiary is called a payable-on-death account; at others, it may be known as a tentative or informal trust. You can usually access and complete the necessary forms from your bank’s website or app. If not, a visit to a branch or a call to customer service should help.

Complete the forms with the full name of each beneficiary, and you may also need their mailing address, phone number, date of birth, and/or Social Security number. This information helps the bank contact and verify the identity of your beneficiaries. You can also designate a favorite charity, nonprofit, or business as a beneficiary.

Notify your beneficiaries so they know to request the money when you die. Beneficiaries need to present a death certificate and proof of identity to collect the money. Update beneficiary information if you decide to change or add beneficiaries, or if their information changes. Check with your financial institution to confirm if your current accounts have beneficiaries.

The Bottom Line

Adding a beneficiary to your savings accounts is easy and can be a significant help to your loved ones if funds are needed immediately to cover bills and final expenses. You can also add beneficiaries to other types of bank and financial accounts, including checking, money market, investment, and retirement accounts. Even with a larger will, trust, and estate plan in place, payable-on-death accounts can streamline part of the inheritance process and make settling your estate easier.

For any mortgage-related needs, feel free to call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

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