Payable on Death (POD) Account

Written by True Tamplin, BSc, CEPF® | Reviewed by Editorial Team

Updated on January 04, 2023

A payable on death (POD) account is a legal arrangement that allows the owner to designate a beneficiary for the account.

When the owner of a POD account dies, ownership of the funds in the account passes automatically to the designated beneficiary without going through probate-the court process used to settle a deceased person's estate.

Once the beneficiary takes ownership of the account, he or she can access it immediately.

Why Should You Establish One?

There are several reasons for establishing a POD account.

One major reason is to make it easier to pass your assets on to your heirs when you die.

When people go to settle an estate, they often find themselves dealing with complicated legal and financial decisions.

A payable on death account offers simple instructions that eliminate this burden for family members who might not be financially or legally prepared to deal with this at the time of an account holder's death.

Another major reason for setting up a POD account is to make it easier to manage finances during (and after) your lifetime.

Setting up a POD account is like creating an informal trust fund. You can give money directly to beneficiaries, but you retain ownership of the money until death.

At that time, beneficiaries automatically get access to the account without any complications or legal paperwork.

How to Set Up a POD Account

The process of establishing a payable on death account is fairly straightforward.

Typically, you'll need to complete the following steps:


  1. Decide when you want money in your account to be disbursed. This is an important consideration because you should only name beneficiaries that you trust to take control of the account at the appropriate time.
  2. Open an account in your own name. This is generally done by transferring money from another bank or brokerage firm into a POD account at a new institution.
  3. Name beneficiaries for your account. Be sure to clearly define which beneficiaries should receive the money in your account. You can name just one person, or multiple people if you'd like to give different sums of money to different individuals.
  4. Decide on the type of account you want to open (brokerage or banking) and select an institution that offers POD accounts.
  5. Sign the account over to the beneficiaries. You might also need to make some other legal arrangements for this, depending on your specific circumstances.

Who Can Be Named as the Beneficiary of My POD Account?

The good news about a payable on death account is that the owner of the account can designate anyone as a beneficiary. There don't have to be any restrictions based on age, marital status, or sex.

However, it may be advisable to create a POD account with someone who is familiar with your financial affairs and has a general understanding of your plans for managing your money.

When Does the Beneficiary Receive the Money in My POD Account?

Whoever you name as the beneficiary of your payable on death account will receive the money in that account following your death.

The money is not immediately available to beneficiaries, however, because it must first pass through probate.

Once this process is complete (typically four to six months after a loved one's passing), the funds will be transferred to the beneficiary.

Common Mistakes of Establishing POD Accounts

One common mistake people make when establishing a payable on death account is to give someone too much responsibility.

Some individuals might try to designate an entire group of beneficiaries. This isn't always a good idea because it can cause conflict between family members and make it difficult for everyone involved to manage the account.

When you do set up a payable on death account, be sure to choose beneficiaries carefully and limit their responsibilities as much as possible.

Another common mistake people make is to open an account with the wrong person (a beneficiary who isn't ready for this sort of commitment) or someone who can no longer manage the account effectively due to age or poor health.

Tips for Maintaining Your Account

Having a POD account is simple and straightforward, but it does require some ongoing financial management.

Here are some tips for maintaining your payable on death account:

  1. Keep all documentation together in one place. This will help ensure that all of your assets pass through probate as quickly as possible after you die.
  2. Update your list of beneficiaries regularly. You might also consider revising the way your assets are distributed.
  3. Keep copies of all legal documents that relate to your account. These will help protect your heirs in case there's ever any confusion or dispute about ownership of these assets after your death.

Final Thoughts

POD accounts are especially useful for establishing a payment plan for beneficiaries so they can have the money you want them to have after your death.

It's also important to remember that POD accounts are separate from wills.

They should not replace legal documents that dictate how your assets will be distributed after you die, but rather supplement those documents by designating who will be responsible for them until they can be distributed.


Payable on Death (POD) Account FAQs

What is a POD Account?

A payable on death (POD) account is an arrangement in which the money in the account passes directly to the named beneficiary after the owner of the account dies.

What Is a POD Account used for?

A POD account is generally used to keep money in an account with a bank, credit union, or brokerage firm until the owner of the account dies.

Who can be named as a beneficiary of my POD Account?

The owner of the account can name anyone as a beneficiary. There are no restrictions based on age, marital status, or sex.

What happens to my POD Account after I die?

Following your death, the bank will hold onto the funds in your payable on death account for a period of time until it can be determined who should receive them. If you have joint accounts with another individual, your POD beneficiary will not need to file any paperwork in order to receive the money in your account. However, if the joint owner of your account dies before you do, a probate court will have to determine who should receive the money from that account.

How often do you need to update a Payable on Death Account?

You should update your payable on death arrangements as often as possible. If new beneficiaries are named or if the existing beneficiaries' information is changed in any way, you should let your bank know.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

Find Advisor Near You