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Set Up Beneficiaries for All Your Accounts

This article was written by in Personal Finance. 13 comments.


While anyone moves towards financial independence, there is a time to think about what would happen to one’s financial accounts if one were to most unfortunately pass away. It’s a morbid thought, no doubt, and it’s easily avoidable in a world where talking about death is difficult. I don’t like to contemplate my own mortality, but realism must sink in as one grows older, particularly when and if life as a single person gives way to the start of a family.

Planning for the inevitable future can involve wills and trusts, but there is a rather simple step that could help potential heirs avoid some problems. Probate could prove to be expensive and problematic, and investors or savers can add one or more beneficiaries to most financial accounts to bypass probate. The beneficiaries named on any financial account will be able to receive money left behind in that account following the death of the account owner without involving lawyers or a hassle.

You can add a beneficiary or a payable-on-death (POD) to most savings and checking accounts. Sometimes, banks seek information about beneficiaries during the account opening process, but not always. Many banks don’t allow you to change beneficiaries online. For banks with brick-and-mortar branches, you may need to visit a personal banker with the beneficiary or with the beneficiary’s personal information (address, Social Security number, etc.) in order to change or add a designation. If you don’t see any options for adding beneficiaries online, contact the bank directly.

It’s also possible that some banks do not allow account holders to designate beneficiaries on deposit accounts. ING Direct is one such bank. Unfortunately, the heirs of the deceased’s estate could have problems receiving the balance in one of the most popular online bank accounts. If this is an issue for you, consider moving your money from ING Direct to a bank that allows payable-on-death designations. With a will or a trust, this designation might not be necessary. Of all the choices, however, POD is the easiest, and every bank should offer it.

Almost always, brokerages and banks will ask for a beneficiary when you open an investment account, whether the purpose of the account is short-term investment or retirement.

Don’t think that your accounts are too small to worry about how the funds will be distributed after you pass away. The accounts could grow, and even if they don’t, the funds you have could be important to someone in the future. With small balances, there is even more of an incentive to avoid costly probate fees.

If you’ve been through any sort of major life change, like a marriage, divorce, or the birth of children, you should take a moment to review your accounts to ensure the proper beneficiaries are listed. As a single guy, this hasn’t been a major priority for me, but as I age, I’ve started to recognize its importance despite the lack of a wife and children. This will be one of my first steps to ensure my funds get in the right hands at the right time, followed by creating a will.

Published or updated September 8, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 13 comments… read them below or add one }

avatar SteveDH

Great advice: POD and TOD (Transfer on death) designations will, in many cases avoid probate but they should not be used in lieu of a will, estate plan, and at least one joint account if you don’t have a spouse. When a distant relative passed intestate it took me 19 months to recover what I paid in “final expenses” because everything was in her name alone. Although I did it voluntarily and wasn’t in jeopardy of not being reimbursed, the process is agonizing.

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avatar Ceecee ♦53 (Newbie)

I try to do this and I am annoyed that ING will not allow it. Having joint accounts can be tricky. If the person named on your account is sued, they can go after what is really your money. Also, it could make the other person ineligible for things they might qualify for…..there are many considerations.
All in all, the POD is easier.

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avatar Cejay ♦1,521 (Half-Dollar)

I realize that 5 need to update some of my accounts. My husband is first but my parents are back up and they have both passed away. My Mom last year and I never thought to update anything other than my insurance.

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avatar Cejay ♦1,521 (Half-Dollar)

Woops that should be I not 5.

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avatar Tom Dziubek

And just a reminder for those beneficiary forms…my name’s spelled D-Z-I-U-B-E-K. A lot of times people put the U before the I.

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avatar Briana @ Prairie EcoThrifter

I need to update my information and make sure my husband is the beneficiary. We’re young but you never know.

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avatar qixx ♦1,895 (Half-Dollar)

I had never considered doing this for my checking or savings accounts. I’m sure there are rules against it but what is to stop someone from logging into my ING accounts after i pass using the login info i leave behind (document left with my will) to just transfer all the money out. Seems that would be an easier (if legally shadier way) with all this online access.

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avatar faithfueledbennetts ♦264 (Nickel)

This is a great reminder. I have a brokerage account that asked for beneficiaries when it opened, but have not added my son since he has been born. You just never know eh? Thanks for the read!

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avatar Evan

The only thing to remember is that you need to change those PODs/TODs when a life changing event occurs – especially with IRA/401(k)s!

http://www.myjourneytomillions.com/articles/make-sure-your-ira-beneficiary-correct/

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avatar Darwin's Money

Here’s an interesting one – make sure to CHANGE your beneficiaries if you write someone out of your will! I have a particular family member who had a falling out with their child. They wrote said child out of their will but never updated the beneficiary info on their 401(k) account. Even though the child didn’t recieve funds out of the general estate, she got the 401(k). (she totally deserved some inheritance by the way, the parent put her through hell); but this was an obvious oversight on the parent’s part.

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avatar lynn ♦155 (Cent)

I am actually doing this right now with a new brokerage account.

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avatar Manoj Bhatacharya

Dear Sirs/Madams,

Please, please somebody from the Barclays Bank contact me about the death of your Customer .

I, e-mailed already about 2 weeks – but no response . And your New York Branch not responding about this.

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avatar Luke Landes ♦127,505 (Platinum)

You’re going to need to contact the bank. This website is not affiliated with the bank.

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