Understanding the Importance of Naming a Beneficiary on Your Savings Account

Have you ever wondered what happens to your savings account when you pass away? If you haven’t given it much thought, it’s time to consider the benefits of naming a beneficiary on your savings account. This simple step can ensure that your money goes directly to your chosen heir(s) without the hassle of probate. In this blog, we’ll explore the reasons for adding a beneficiary, how to do it, and the advantages it offers.

Can You Have a Beneficiary on a Savings Account?

Yes, you can add a beneficiary to your savings accounts, including high-yield savings accounts, money market accounts, and certificates of deposit (CDs). By designating a beneficiary, you instruct your bank or credit union on how to distribute your money when you pass away. While financial institutions don’t require you to name a beneficiary, doing so ensures that your money ends up with your preferred heir(s) and not tied up in probate. Adding a beneficiary is typically free and doesn’t grant them any rights to access your money or account information while you’re alive.

Do You Need a Beneficiary if You Have a Joint Account?

A joint account usually passes to the surviving account holder(s) when one account holder dies. However, it’s still a good idea to name a beneficiary to determine who receives the money when all parties on the account are deceased. This ensures that your funds are distributed according to your wishes.

Reasons to Add a Savings Account Beneficiary

The primary reason to add a beneficiary to your savings account is to avoid probate. Probate is a legal process for transferring property after a person passes away, which can take a year or more, tying up assets your heirs may need to cover expenses. Naming a beneficiary for your account doesn’t replace having a will or living trust, especially if you have real estate or personal property to pass down. However, financial institutions often prioritize beneficiary instructions over a will, as these instructions are part of your banking contract.

How to Name a Beneficiary on a Savings Account

The process of naming a beneficiary may vary slightly from one financial institution to another. At some banks, an account with a beneficiary is called a payable-on-death account; at others, it may be known as a tentative or informal trust. You can usually access and complete the necessary forms from your bank’s website or app. If not, a quick visit to a branch or call to customer service should help you get started.

Here are the steps to name a beneficiary:

• Complete the forms: You’ll need the full name of each beneficiary, and possibly their mailing address, phone number, date of birth, and/or Social Security number. This information helps the bank contact and verify the beneficiary’s identity in the event of your death.
• Notify your beneficiaries: While not required, it’s a good idea to inform your beneficiaries so they’ll know to request the money when you die. Beneficiaries need to present a death certificate and proof of identity to collect the money.
• Update beneficiary information: Notify your bank if you decide to change or add beneficiaries, or if their information changes. Check with your financial institution to confirm whether your current accounts have beneficiaries.

The Bottom Line

Adding a beneficiary to your savings accounts is easy and can be a significant help to your loved ones if funds are needed immediately to cover bills and final expenses. You can also add beneficiaries to other types of bank and financial accounts, including checking, money market, investment, and retirement accounts. Even with a larger will, trust, and estate plan in place, payable-on-death accounts can streamline part of the inheritance process and make settling your estate easier.

At O1ne Mortgage, we understand the importance of financial planning and ensuring your loved ones are taken care of. If you have any questions about naming a beneficiary on your savings account or need assistance with any mortgage services, don’t hesitate to call us at 213-732-3074. Our team of experts is here to help you navigate the complexities of financial planning and provide the best solutions for your needs.

Remember, taking the time to name a beneficiary on your savings account is a simple yet crucial step in securing your financial legacy. Contact O1ne Mortgage today, and let us help you make the best decisions for your future and your loved ones.