- Beneficiaries can be assigned to all traditional bank accounts.
- You can designate a beneficiary at any time, but you will need certain documents.
- Consider adding a beneficiary if you want someone to have easy access to your account after you die.
- Read more stories from Personal Finance Insider.
Preparing for unforeseen circumstances includes having a plan for disruptions that may impact your family’s financial stability. If you want to make sure someone can easily claim your bank account after you die, you can assign a beneficiary to your bank account.
What is a bank account beneficiary?
A bank account beneficiary is a person who can take over your bank account after your death.
Most financial institutions allow you to designate a bank account beneficiary for traditional bank accounts, such as savings accounts, checking accounts, CDs, and IRA accounts.
Do I need to add a bank account beneficiary?
Sophia Bera, CFP® professional and founder of Gen Y Planning, says adding a bank account beneficiary can be ideal if you’re single or unmarried. It might also be worth considering if you want someone to have easy access to your bank account.
If you died before you took care of your estate planning and your will, your bank accounts will be subject to probate. As a result, it can take months for your assets to settle.
Adding a beneficiary can be helpful if your family has to pay funeral expenses, Bera says.
“If you don’t have something like this set up, your account could be probated and your family members could have to wait months to access that money. If they try to close your deals, it can be very costly” , She adds.
If your family members are trying to figure out your affairs after you die, they will also need to know where you can keep your money and how to access it.
“I think it brings up a very important conversation about where you even have those bank accounts,” Bera says. “They can just say, ‘This is where she keeps her bank accounts. This is where she keeps her checks and her savings. She has a 401(k) through work.’ They will know where everything is.”
Operation of bank account beneficiaries
As long as the owners of the bank are alive, the beneficiary will not be able to view, deposit or withdraw accounts. Beneficiaries of bank accounts will not have access to bank accounts until all bank account holders are deceased.
Bera notes that if you die, your beneficiary will need to present a death certificate to your financial institution to access your bank account.
If you have a negative account balance when you die, the beneficiary of the bank account is not obligated to pay the amount you owe. The person will simply not receive any money.
How to add a bank account beneficiary
If you want to add one or more beneficiaries to your account, you will likely need the same documentation that you would need to open a bank account. The following information may be required:
Most financial services will require you to contact your local branch or call customer service to add a beneficiary. However, some may also allow you to make changes to your account through online banking.
Bank account beneficiaries can be added at any time. You do not need to assign a bank account beneficiary when you open a new bank account. You can also choose to remove a beneficiary from your account at any time if you need to.
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