Several things can happen to your bank account after you die. This depends on the type of account, how it was set up before you died, and whether you have a will or trust in place. Learn the common ways you can set up your account to make things as simple as possible after your passing and what happens if you don’t take any action beforehand.

Key Takeaways

• Adding payable on death and/or transfer on death beneficiaries to your account is the easiest way to ensure your heirs have easy access to your account after passing.
• Adding joint account holders with rights of survivorship makes things simpler after you pass but can lead to complications while you live.
• Setting up a will or trust can help your heirs access money after your passing, but your account can still be part of the probate process.
• Doing nothing will make things more complicated and stressful for your survivors so make sure you have something in place for their sake.

Name Bank Account Beneficiaries

If you want money to go to your survivors in the simplest, quickest, and least stressful way possible, then you want to avoid probate as much as possible. Adding one or more beneficiaries ensures that your account is passed on to your heirs without having to go through probate, which can take months. You can do this in one of two ways (depending on the type of account you have):

• Payable on death (POD): This is an arrangement with a bank, credit union, or financial institution POD facilitates a seamless transfer of any checking accounts, savings accounts, security deposits, savings bonds, and/or certificates of deposit (CDs) that you hold. It is also known as a Totten trust.
• Transfer on death (TOD): Like the POD option, TOD is a designation that allows certain investment accounts, such as stocks, bonds, brokerage accounts, and other investment types to be transferred to the beneficiary when you die.

Keep in mind that your beneficiary can’t access your account while you’re alive so they can’t make withdrawals or deposits to your account until you die. You can also change your beneficiaries at any time. Your beneficiary will need to show a valid government ID and a copy of your death certificate to access the funds in your account upon your death.

This option is frequently referred to as a poor man’s trust since it essentially acts as a trust that easily transfers money to the person you designate. Unlike a trust, though, you don’t have to pay fees to set it up or whenever you want to make changes.

Banks and other financial institutions commonly freeze the accounts of deceased individuals to prevent fraud. This is one reason why it's important to have a POD or TOD beneficiary designated to ensure your money can be accessed by your loved ones if you pass away.

Add Account Holders

Adding account holders to your bank accounts can make things easier for your heirs after you die. Most joint account holders are considered joint tenants with rights of survivorship (JTWROS), which means the account automatically passes to the survivor(s) when an account holder dies. Check with your bank if you’re unsure about the status of your account.

But having multiple account holders can be complicated while you are alive. For example, joint account holders may:

• Have access to your account, which means they can freely use your account without your knowledge or consent
• Be subject to gift tax, depending on the amount in the account(s)

The assets in the account are legally considered theirs to qualify for government assistance programs or if they have a creditor with a judgment against them. Make sure that you trust the people you are naming on your account and think through the possible ramifications before you do so.

Have a Will

A will is a legal document that allows you to declare how you want your assets divided after you die. Your will can also outline any other instructions you want to leave about your children, pets, or any other matters, which is why it’s important to draft a will.

If you have a will in place, your heirs may not necessarily avoid probate. But at the very least, you will set guidelines for who gets your assets. The probate process can be lengthy, and your heirs may be required to hire costly probate attorneys depending on where they live.

Your will becomes public knowledge after your passing, and assets passed on through wills may still be subject to estate taxes.

Set up a Trust

A trust is a separate legal entity. When you set up a trust, you appoint a trustee who oversees all of your assets for a beneficiary. Having a trust in place ensures that your assets are handled and distributed according to your wishes. Trusts help your beneficiaries avoid probate and can reduce the tax liability for your heirs. 

But, not all trusts are equal and are not always set up perfectly. They can also be expensive to set up and maintain and may not be worth the cost if you have a simple estate with few assets and potential heirs. Even so, you need to set up a POD for your bank accounts or retitle the accounts to the trust.

A POD, TOD, or joint account may often override any directions outlined in your will or trust. In community property states, spouses may be entitled to half of the assets in an account—even with a special designation like a POD, TOD, or joint account. Be sure to speak to your financial institution or a financial professional for more information.

Dying Without a Plan

If you don’t set up anything before you die, your accounts will go to probate. As such, anything you own is distributed according to your state’s laws. An executor is appointed in most states. This individual assumes the responsibility of paying off your creditors. Any money that remains is distributed to your spouse and children.

If you die without leaving a will, trust, or joint account holders, and you have no survivors or beneficiaries, your estate’s funds end up in the hands of the state. This is why estate planning is so important—even if you’re in good health.

What Happens to a Bank Account When Someone Dies Without a Will?

If the deceased names a payable on death or transfer on death beneficiary for the account, the person named will get access to it immediately. They will simply need to show a death certificate and identification to the bank. This lets them avoid a lengthy probate process in which a court authorizes the management and distribution of the estate.

How Can I Avoid Probate?

If you have a simple estate with no assets other than a bank account, adding a payable on death or transfer on death beneficiary to your account(s) is the easiest way to avoid probate. However, if you have a complex estate or multiple heirs you want to leave things to, a trust may be your best option to avoid probate.

Do My Heirs Have to Pay Taxes on the Money in My Account?

That depends. Federal estate taxes have a relatively high threshold—$12.92 million in 2023 and $13.61 million in 2024. Gift taxes come into play if you give someone anything above a certain value "where full consideration (measured in money or money's worth) is not received in return" while you are alive. The limit for 2023 is $17,000 and $18,000 in 2024.

The Bottom Line

The easiest way to pass money to your heirs is to name them as payable on death or transfer on death beneficiaries on your accounts. Setting up a will or trust is an important part of estate planning, but it may not guarantee that your heirs get access to your money quickly. Having them as beneficiaries ensures they can access your account immediately upon your death.

You may also want to consider adding joint account holders, which makes things easier after you die. But you should make sure that you understand the risks of doing so while you live. Regardless of your choice, make sure you do something to make life easier for your survivors while they are grieving.

Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

1. Nolo. “Payable-on-Death (POD) Accounts: The Basics.”

2. Federal Depository Insurance Corporation. “Financial Institution Employee’s Guide to Deposit Insurance,” Select, Section IX Informal Revocable Trust Accounts (Payable-on-death) (POD).

3. Consumer Financial Protection Bureau. "Can I Be Responsible to Pay Off the Debts of My Deceased Spouse?"

4. Social Security Administration. "Program Operations Manual System (POMS): SI 01140.205 Joint Checking and Savings Accounts."

5. New York State Unified Court System. "Last Will and Testament."

6. Internal Revenue Service. "Estate Tax."

7. Internal Revenue Service. "Frequently Asked Questions on Gift Taxes."

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