What Is a Payable on Death (POD) Account?
In plain English
A Payable on Death (POD) designation — also called a Totten trust or informal trust — is added to bank accounts (checking, savings, CDs, money market) to name beneficiaries who receive the funds directly upon the account holder's death. The designation is free, has no effect during the owner's lifetime, and allows funds to transfer without probate. POD is the banking equivalent of a transfer-on-death designation for investment accounts.
How Do You Set Up a POD Designation?
Setting up POD is simple: visit your bank or complete the form online, and name one or more beneficiaries with percentage allocations. You retain complete control — you can spend, withdraw, close the account, or change beneficiaries at any time without notifying anyone. The beneficiary has no rights to the account during your lifetime and cannot make withdrawals. Upon death, the beneficiary presents a death certificate to the bank and receives the funds, typically within days.
What Are the Advantages of POD Accounts?
POD designations offer several benefits: completely free to set up; instant probate avoidance for bank funds; no impact on your account access during life; beneficiaries receive funds quickly after death (days vs. months through probate); and you can change or remove beneficiaries at any time. For many people, POD designations on bank accounts combined with TOD on investment accounts can eliminate the need for a trust for simple estates.
What Are the Limitations of POD Designations?
POD shares the same limitations as TOD: no conditional distributions, no protection for minor or incapacitated beneficiaries, and no ongoing management after transfer. If a named beneficiary predeceases you and you haven't updated the form, their share may go to your estate (and through probate). POD also does not protect the funds from the beneficiary's creditors once transferred. For complex family situations, a living trust provides more flexibility.
Frequently asked questions
Does a POD designation override a will?
Yes. Like all beneficiary designations, POD overrides your will. If your will leaves your savings to your daughter but the POD names your son, your son receives the money. It's important to ensure that POD designations align with the overall estate plan.
Are POD accounts protected by FDIC insurance?
Yes. POD accounts receive FDIC insurance coverage of $250,000 per beneficiary. An account with three POD beneficiaries would be insured up to $750,000. This makes POD designations a way to increase FDIC coverage at a single bank.
Keep exploring
Related terms
Transfer on Death (TOD)
A transfer on death designation allows investment and brokerage account assets to pass directly to named beneficiaries upon the owner's death, bypassing probate.
Beneficiary Designation
A beneficiary designation is a form attached to financial accounts that specifies who receives the assets directly upon the account holder's death, bypassing probate.
Probate
Probate is the court-supervised legal process of validating a will, settling debts, and distributing a deceased person's assets to beneficiaries.
Will
A will is a legal document that specifies how your assets should be distributed and who should care for your dependents after your death.
Living Trust
A living trust is a legal entity created during your lifetime to hold and manage assets, allowing them to pass to beneficiaries without going through probate.