What Is a Bank Account Beneficiary?

Parents may designate their children as beneficiaries of their bank account.
In the United States, if the deceased has a living spouse, he or she typically inherits the estate, while any children are next in line.
If the primary beneficiary is no longer living, the account assets will go the secondary beneficiary.
A bank account beneficiary is someone designated to receive the assets held in a bank account after the account holder's death.
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  • Written By: Elise Czajkowski
  • Edited By: Susan Barwick
  • Last Modified Date: 25 November 2015
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A bank account beneficiary is someone designated to receive the assets held in a bank account after the account holder's death. Moreover, choosing a beneficiary is required to open some bank accounts. The designated beneficiary, however, can be changed by the account holder at any time.

In some cases, an account holder designates a primary bank account beneficiary and a secondary beneficiary. In this case, assets from the account will go to the primary beneficiary on the account holder's death. If the primary beneficiary is no longer living, the assets will go the secondary beneficiary.

Account holders are generally able to divide assets by appointing multiple beneficiaries. These beneficiaries are each given a certain percentage of the assets at the time of the account holder's death. This can be done for both primary and secondary beneficiaries.

The purpose of having a bank account beneficiary is to ensure that an account holder's money goes to the person or group that the account holder chooses. It also simplifies the legal process of passing money from the estate of the deceased to the intended recipients. This is of particular importance for account holders who do not possess a will.


A bank account beneficiary designation can pass the contents of a bank account separately from the rest of that person's estate. The persons designated as beneficiaries may differ from those who receive under the will. For instance, a bank account holder may make one child the account's beneficiary while the will indicates that the estate is to be divided equally between him and the other children. Unless specifically negated in the will, the bank account designation usually overrides the general instructions in the will.

While many people designate family members as beneficiaries, it is possible to designate an organization as the beneficiary. This gives account holders the option of leaving a bank account's assets to a charitable organization or religious group at the time of their passing. In these cases, various taxes may be levied on the assets.

Generally, financial advisors recommend discussing the designation of bank account beneficiaries with an estate planner and others who are concerned with a person's financial situation. This includes discussing the decision with a spouse or other family members. Prior discussion can allow for a smoother disposition of assets after the account holder's death.


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Post 3

When a person dies, dividing up the estate and settling bank accounts can be a big hassle. I know more and more people who are turning over their bank accounts to the would-be beneficiaries before they die. This way the beneficiaries don't have to pay taxes, and the money goes where it was meant to go. Of course, you have to have absolute trust in your beneficiary when you do this.

Post 2

Neither my mother nor father had a designated bank account beneficiary for their bank accounts beyond one another. I don't know whether they filled out paperwork for this or whether the spouse was an automatic beneficiary, but they didn't have me listed on the accounts anywhere.

My father died first. All of the money went to my mother's account. Then when she died the money was still in her account. The only reason I was able to easily get the money was because my mother had dementia, and I had power of attorney over her legal matters. Had it not been for this, I might not have ever gotten the money from the accounts. At least, I know there would have been a lot of legal red tape to go through before I saw any of the money.

Post 1

My friend's father died recently. Her mother died years ago. My friend was the only living child, so everything her father owned should naturally go to her. I was surprised when she told me how much trouble she had when she tried to get the money from his savings account at the bank.

Most people just assume that whatever they have when they die will go to their next of kin. We all know this can be a problem when the next of kin is a group of siblings, but this wasn't the case with my friend. She thought getting the money from the bank would be simple.

It wasn't. Everyone should have a beneficiary picked out when he or she opens a new bank account, so that there will be no problems if the person dies without a will in place to spell out where everything goes and who gets what.

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