How Beneficiaries Can Claim Payable-on-Death Assets

How to take ownership of POD assets you inherit.

By , J.D. · UC Berkeley School of Law

These days, people leave lots of property to inheritors by using "payable-on-death" (POD) or "transfer-on-death" (TOD) designations. The owner of the property simply names a POD beneficiary on a form. Then, when the owner dies, the property doesn't have to go through the probate process; the named beneficiary can claim it directly.

It's common for people to name payable-on-death beneficiaries for several kinds of property, including:

  • bank accounts
  • stocks and bonds, either held separately or in a mutual fund or brokerage account, and
  • U.S. savings bonds.

In some states, people can name transfer-on-death (TOD) beneficiaries for vehicles and even real estate, which works in a similar way. Each of these is discussed below.

If the POD Asset Was Co-Owned

If property is jointly owned, any POD beneficiary inherits it only after both owners have died. For example, let's say that a husband and wife own a bank account together in joint tenancy and name their daughter as the POD beneficiary. When the first spouse dies, the surviving spouse will own the account. When the second spouse dies, the daughter will inherit it. (To learn more rules about co-owned property, see Joint Property and Concurrent Ownership.)

The Effect of Divorce on POD Beneficiaries

Most states have laws providing that if someone names his or her spouse as a POD beneficiary and the couple later divorces, then the beneficiary designation is automatically canceled. These laws are based on the assumption that people who don't change the beneficiary designation of a former spouse probably meant to do so.

These state laws do not, however, affect assets that are governed by federal law—including 401(k) retirement plans, employer-provided life insurance policies, and pension plans. (These are governed by the federal Employee Retirement Income Security Act, better known as ERISA.) The U.S. Supreme Court has ruled that under ERISA, when the plan participant dies, the plan administrator must simply pay the proceeds to the beneficiary the deceased person named. The administrator does not have to try to figure out who should get the money under a particular state's law. For more information, see Claiming Pensions, Veterans, and Other Benefits: Information for Executors and Beneficiaries.

How Beneficiaries Can Claim POD (or TOD) Assets

The exact procedure for claiming POD assets depends on what kind of property the beneficiary inherits, but the processes are fairly similar and should be simple.

Bank accounts. If the deceased person owned a bank account as a payable-on-death (POD) account (sometimes called a Totten trust), the POD beneficiary named in the bank's records can collect the money promptly, without probate. All the beneficiary needs to do is show the bank proof of death (a certified copy of the death certificate) and personal identification. Something to keep in mind: some states limit who can inherit POD accounts. In Georgia, for example, corporations, even charitable nonprofit corporations, cannot be POD beneficiaries of a bank account.

U.S. Savings Bonds. The POD beneficiary of a savings bond automatically becomes the bond's sole owner when the original bond owner dies. The beneficiary can do any of the following:

  • Do nothing with the bond.
  • Redeem the bond by taking it to a bank or other financial institution that pays savings bonds (the beneficiary will need personal identification).
  • Get the bond reissued (reregistered) in the beneficiary's name alone or with some other person.

To get a new bond showing the beneficiary as the owner, the beneficiary must complete the Treasury Department's Form 4000, Request to Reissue United States Savings Bonds. As part of getting the bond reregistered, the beneficiary can add a co-owner or a POD beneficiary of his or her own. That's often a good idea. After the form is complete, the beneficiary must sign it in front of someone who is authorized to "certify" the signature. This isn't the same as notarization. Most banks have employees who are authorized certifying officers. Finally, the beneficiary must send the signed form, with a certified copy of the death certificate, to one of the Savings Bond Processing Sites listed on the form.

Vehicles. If you've inherited a car that was registered in TOD (beneficiary) form (valid in some states), you'll need to get the vehicle reregistered in your name. It should be an easy process, involving a fill-in-the-blanks form and a small fee. You'll need to submit several documents to the state motor vehicles department, including:

  • an application for the new certificate of ownership
  • the old certificate, if you have it, and
  • a copy of the death certificate.

After you submit these documents and pay the small fee, the state will issue a new registration. For forms and instructions, contact your state's motor vehicles department. Try the agency's website first; you may find everything you need there. If the car wasn't paid for at the owner's death, the new owner inherits the debt as well as the car.

Real estate. If you're transferring property left by a transfer-on-death deed (valid in over half of the states), the person who inherits the real estate must put something in the public land records showing that ownership has changed. The office that keeps local land records goes by different names in different states; for example, in some places it's called the county recorder, in others the register of deeds. Not all states' laws set out a specific procedure for the beneficiary to follow. The ones that do require the beneficiary to record two documents:

  • a certified copy of the death certificate, and
  • an affidavit (sworn statement signed in front of a notary public) setting out certain information.

If the TOD deed named more than one beneficiary but not all of them survived the original owner, then the surviving beneficiaries must also record certified copies of the death certificates of the deceased beneficiaries. There is usually a modest fee per page to record these documents. You can call ahead to find out.

More Resources

For more information about protecting beneficiaries' rights—and all aspects of settling an estate—see The Executor's Guide: Settling a Loved One's Estate or Trust, by Mary Randolph, J.D. (Nolo).

You won't usually need a lawyer just to claim POD or TOD property if you're listed as a beneficiary. But if your situation is more complicated, you should consult a probate attorney.

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