How to add a beneficiary to a bank account

how to add a beneficiary to a bank account

When signing up for a standard checking account or savings account, most people don’t think about a bank account beneficiary. Things can get complicated for your loved ones if something happens to you and there isn’t a beneficiary setup. And so, you may want to think about adding someone who can inherit your bank account. 

Below are all the steps you will need to take in order to add a beneficiary to a bank account. Additionally, you will find some extra information on what comes with that addition in different circumstances. 

Do Bank Accounts Automatically Have Beneficiaries?

When it comes down to it, a person’s bank account is an asset, and because of this, you may think that a beneficiary is a part of the application process, but it is not! Banks will not ask for beneficiaries when you sign for a checking or savings account. You will have to set that up once you have your accounts. 

Why Is It Helpful To Have a Beneficiary on Your Bank Account? 

When a bank account does not have a beneficiary and the account owner passes away, that account will go through the probate process. Probate is a legal process where a bank account without a beneficiary is put into the hands of courts to be distributed. Before any money is sent to a family member or friend (per the will), any debts owed to financial institutions will be taken out of the account. Many debts are forgiven at death, but others are not, so there could be a large chunk of money taken from the account.

The probate process can be lengthy and leave friends/family losing a significant amount of money. And so, to provide financial security and make things as easy as possible for your loved ones, you should have a bank account beneficiary. 

What Types of Bank Accounts Can Have a Beneficiary?

Here are some examples of all the different banking accounts and products that can have a beneficiary added to them: 

  • Checking accounts. 
  • Savings accounts.
  • CDs.
  • IRAs (Individual retirement accounts). 
  • Brokerage accounts.

A Step-by-Step Process of Adding a Beneficiary to Your Bank Account

Adding a beneficiary to your account is actually pretty simple and free; so you don’t have to worry about borrowing funds through installment loans or having to budget that cost! Here is what you will need to do in order to add a beneficiary to your bank account: 

Step 1: Gather All the Necessary Documents and Information

You will need a photo ID, and having your debit card will help retrieve your account information. You should also have information on your beneficiary, including their name, address, and phone number—they do not need to present during this process. 

Step 2: Visit Your Local Bank or Credit Union Branch

The next step is to head to a branch location with the Depository institution you have your account with. Depending on the business you bank with, you may not have to make an appointment to talk to a bank teller/bank associate. Let them know about wanting to add a beneficiary to your account. 

Step 3: Fill Out the Necessary Paperwork and Confirm

The last and final step is to fill out the paperwork the bank gives you for your account or accounts. You’ll have to double-check everything and confirm that the information you provided is accurate. Once that is done, your associate/teller will process that information, which will be on record. 

And that is it! With 3 simple steps, you can add a beneficiary to your bank account! If you only have online banking, then you should be able to find an option of adding a beneficiary online or contacting someone over the phone to get the process started. 

Can Joint Bank Accounts Have a Beneficiary?

A joint bank account usually has two people on it, usually those who share their finances, a spouse, a family member, etc. Joint account holders can add a beneficiary to their account. In some cases, both account holders must be present for the process, but not always. However, both parties should have a conversation and agree on a beneficiary before any paperwork is filed.

With a joint bank account, if there is no beneficiary and one owner passes away, the other owner will have instant access to that account. 

What Should I Do If I Change My Mind About a Beneficiary?

Let’s say you add a beneficiary to your bank account but change your mind after a life event. You can definitely change your beneficiary. All you have to do is return to your bank branch with the new beneficiary’s information and ask for an amendment. You will receive the necessary paperwork, and once filled out, that information will be updated. It is essential to remember that a beneficiary will override a will, so it is important to update that information accordingly. 

It is recommended that you check on your beneficiary information at least annually to ensure that you can correct things if a bank teller made a mistake, fix things if you provided the wrong information, or to update your beneficiary’s information if it has changed. 

Can I Have Multiple Bank Account Beneficiaries?

Yes, you can have multiple beneficiaries both a single bank account holder or joint account holder. You should add all their information when filling out the required paperwork. 

If the account holder dies and there are one or more beneficiaries, the funds from the bank account will be split equally between them. 

What Is a POD Account?

When you add a beneficiary or beneficiaries to a bank account, that account is now a Payable on Death (POD) account. This does not change anything about the bank account while you are using it, but it does make things easier for your POD beneficiary if they are inheriting the account. POD accounts are essentially trusts, meaning the money from the account will go straight to whoever is listed on the account. There is no lengthy probate process for the person inheriting the funds in the account. 

The Takeaways With Bank Accounts and Beneficiaries

There are several benefits to having a bank account and most Americans have one. Adding a beneficiary to a bank account may not be on your mind at all—most of us sign up for these accounts when we are teenagers! However, in the event of your death, not having a designated beneficiary can make things extremely complicated for your family members and friends. Not to mention they may lose a lot of money depending on the amount of debt you had. 

And so, it is always a good idea to add someone to inherit a bank account. Doing so is pretty easy, too; you just have to provide some basic information and contact your bank for some paperwork. Once over, you can have peace of mind that one of your most important assets will be given to a loved one who can actually use it when you pass away. 

Bank Account Beneficiary Rules – Forbes Advisor
NYC & Long Island Probate Attorney | Burner Law Group

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