Do Bank Accounts Go to Probate if There is a Beneficiary?

December 22, 2025 •

3 min read

According to financial experts, a properly designated beneficiary on a bank account is one of the simplest and most effective ways to ensure your funds bypass the lengthy and costly probate process. If you are wondering, "Do bank accounts go to probate if there is a beneficiary?," the short answer is typically no, but understanding the specific rules and exceptions is crucial for effective estate planning.

Quick Summary

Bank accounts with a Payable-on-Death (POD) designation allow funds to transfer directly to the named beneficiary upon the owner's death, bypassing the probate process. This guide examines how this works, the role of joint accounts, and what happens if no beneficiary is named.

Key Points

Probate Avoidance for Beneficiaries: A bank account with a properly designated Payable-on-Death (POD) beneficiary does not go through probate because the funds are transferred directly to the named individual by contract.
POD Overrides a Will: The beneficiary designation on a POD account supersedes any conflicting instructions that might be in the account holder's last will and testament.
Claiming Funds is Simple: To access a POD account, a beneficiary typically needs to present a certified death certificate and proper identification to the financial institution.
Joint Tenancy Also Avoids Probate: For joint accounts with rights of survivorship, the surviving owner automatically becomes the sole owner of the funds upon the death of the other, avoiding probate.
Risks of Joint Accounts: While convenient for incapacitation, a joint account exposes funds to the co-owner's creditors and gives them equal access during the owner's lifetime.
Update Designations Consistently: Failure to update beneficiary designations after life changes (marriage, divorce, death of a beneficiary) can lead to unintended distributions and conflict.
Probate for Undesignated Accounts: Any bank account without a POD beneficiary or joint owner will be subject to probate, potentially causing delays and extra costs for heirs.

How a Beneficiary Designation Avoids Probate

For a bank account to go through the probate process, it must be an asset solely owned by the deceased without a designated beneficiary. A beneficiary designation, commonly a Payable-on-Death (POD) or Transfer-on-Death (TOD) designation for bank accounts, is a contract with your financial institution. This contract dictates that upon your death, the account funds will automatically transfer to the named beneficiary or beneficiaries.

The contractual nature of a POD account means it overrides instructions in a will for that specific account. The bank's process is straightforward and avoids court involvement. The beneficiary typically needs to present a certified death certificate and identification to the bank to access the funds. This process is generally faster and more private than probate.

The Role of Joint Ownership in Avoiding Probate

Another method to avoid probate for bank accounts is through joint ownership with rights of survivorship. When one owner dies, the surviving owner automatically becomes the sole owner of the account without probate. The bank updates records after receiving a death certificate.

Comparison: POD vs. Joint Account

Deciding between a POD designation and a joint account involves considering control and risk.


Feature	Payable-on-Death (POD) Account	Joint Account with Right of Survivorship
Owner Control	Account owner maintains full control during their lifetime; beneficiary has no access.	Both joint owners have equal access to funds at any time.
Creditor Access	Beneficiary's creditors cannot claim funds while the owner is alive.	A joint owner's creditors may access funds.
Incapacity Protection	No protection if owner is incapacitated; requires power of attorney.	Joint owner can access funds if the other is incapacitated.
Inheritance Flexibility	Allows for multiple beneficiaries and specific percentages.	Surviving joint owner receives the entire balance, potentially excluding other heirs.
Legal Process	Transfers funds by contract directly with the bank, avoiding probate.	Automatically transfers ownership to the survivor upon death, avoiding probate.

Potential Complications and Considerations

While beneficiary designations are effective, consider these potential issues:

Beneficiary Predeceases: If the primary beneficiary dies before you and there's no contingent beneficiary, the account may go through probate.
Minor Beneficiaries: Naming a minor directly can cause complications, often requiring court-appointed management of the funds.
Conflict with Will: A POD designation overrides a will for that specific account.
Creditor Claims: While avoiding probate, funds might not be protected from estate creditors, depending on state law.

What to do if there is no beneficiary

If a bank account lacks a beneficiary or joint owner with rights of survivorship, it becomes part of the deceased's estate and must go through probate. A court-appointed executor manages the estate, pays debts, and distributes assets according to the will or state law. Probate can be a lengthy, public, and costly process.

Conclusion

Bank accounts with a designated beneficiary or joint owners with rights of survivorship typically bypass probate. A POD designation is a simple way for single account holders to avoid probate while keeping control. Joint tenancy offers immediate co-owner access but carries risks like creditor access. Regular review of beneficiary designations is vital. These methods avoid probate for the specific account but don't replace a comprehensive estate plan covering all assets. A complete plan ensures all assets are distributed as intended. {Link: American Bar Association https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/}

Key Takeaways

Probate Avoidance for Beneficiaries: A bank account with a properly designated Payable-on-Death (POD) beneficiary does not go through probate.
POD Overrides a Will: The beneficiary designation on a POD account supersedes any conflicting instructions in a will for that account.
Claiming Funds is Simple: To access a POD account, a beneficiary typically needs to present a certified death certificate and proper identification to the financial institution.
Joint Tenancy Also Avoids Probate: For joint accounts with rights of survivorship, the surviving owner automatically becomes the sole owner upon death.
Risks of Joint Accounts: Joint accounts expose funds to the co-owner's creditors and give them equal access.
Update Designations Consistently: Regularly review and update beneficiary designations.
Probate for Undesignated Accounts: Any bank account without a POD beneficiary or joint owner will be subject to probate.

Frequently Asked Questions

A Payable-on-Death (POD) account is a bank account that has a designated beneficiary. This person will receive the funds in the account upon the owner's death, bypassing the probate process entirely. It's also sometimes called a Totten Trust.

To claim the funds, the beneficiary must contact the bank and provide a certified copy of the account holder's death certificate and proof of their own identity. The bank will then transfer the funds directly to the beneficiary, usually after filling out a few forms.

A beneficiary designation is often simpler and faster for transferring bank account funds, as it avoids probate. It also overrides instructions in a will for that specific account. However, a will is still necessary for distributing assets that do not have a beneficiary designated.

If the primary beneficiary dies before the account holder and there is no contingent (alternate) beneficiary named, the account will be treated as if no beneficiary was ever designated. This means the funds will become part of the general estate and will likely go through probate.

Yes, but it's not always a straightforward process. Banks will not release funds directly to a minor. Doing so typically requires a court to appoint a legal guardian or custodian to manage the money until the minor reaches the age of majority, which defeats the purpose of avoiding probate.

The funds in a POD account are considered part of the decedent's taxable estate and could be subject to federal or state estate taxes if the total estate value exceeds the exemption amount. However, the beneficiary receives a 'step-up in basis' for the account's value as of the date of death, which can reduce capital gains taxes on appreciated assets.

While these accounts avoid probate, the funds are not always shielded from creditors of the deceased. An estate's executor may have the right to claim the funds back from the beneficiary to pay off debts, though this depends on state laws.