Banks do not require checking account holders to name beneficiaries to the accounts. If a person wants to name a beneficiary of his checking account in the event of his death, he lets the bank know the person’s name. The bank then converts the checking account into a payable-on-death (POD) account. Due to increasing interest, some banks offer their customers POD accounts as part of their standard offerings.
Setting Up a POD Account
To convert a checking account into a POD account, choose a beneficiary and notify the bank of your wishes. The bank fills out the appropriate paperwork so your account’s funds will pass directly to the beneficiary after your death. You may wish to convert your checking account to a POD account if you want someone specific to receive the account’s funds.
Beneficiaries
Under normal circumstances, the money in a bank account becomes part of a person’s estate when he dies. However, POD accounts bypass the estate and probate process. To claim the money, the beneficiary simply has to show up at the bank, prove his identify and produce a certified copy of the account holder’s death certificate.
Other Claims on the Money
Married checking-account-turned-POD-account holders in community property states should be aware that their spouses automatically get half the money they contributed during the marriage, even if another beneficiary is named. Spouses in non-community property states have a right to dispute the distribution of the funds in court.