When it comes to bank accounts with beneficiaries, probate is often unnecessary. That’s because these accounts are designed to transfer directly to the named beneficiary upon the account holder’s death, bypassing the court-supervised probate process entirely.
Probate, while important, can be costly and time-consuming. It involves authenticating the will (or determining intestacy if there isn’t one), appointing an executor or administrator, gathering and valuing assets, settling debts and taxes, resolving disputes and distributing the estate to beneficiaries in accordance with the will or heirs in accordance with intestate succession laws.
Even though probate serves a legal purpose, it is a process many aim to avoid, since it not only delays access to funds but also reduces the inheritance available to beneficiaries and heirs due to court fees, administrative expenses and creditor claims.
To avoid probate on bank accounts, many account holders proactively name a beneficiary (or beneficiaries) using a Totten trust — a form that converts a standard bank account into a payable-on-death (POD) account. With a POD account in place, the designated beneficiary can usually claim the funds without delay upon the account holder’s death by presenting the bank with a certified copy of the death certificate and their valid government-issued ID — which they generally can do before probate even begins.
Say a parent names their adult child as the POD beneficiary on their bank account. This would enable the child to go directly to the bank after the parent’s passing to claim the funds. In other words, the account would not need to pass through probate first.
That said, issues like invalid beneficiary designations, unclear paperwork or legal disputes do have the potential to make bank accounts with beneficiaries subject to probate in some cases.
It’s also important to note that many account holders don’t name beneficiaries — often, because they aren’t aware they have the right to do so. A bank account without beneficiaries can also become subject to probate.
If you’re unsure about your rights or believe a bank account should — or shouldn’t — be included in probate, an experienced probate attorney can help you navigate your options, resolve disputes and protect your inheritance.
When Do Bank Accounts With Beneficiaries Have to Go Through Probate?
While bank accounts with beneficiaries typically transfer outside of probate, there are several scenarios in which they may still need to be included in a decedent’s estate and pass through the probate process. These situations usually involve beneficiary designations that are disputed, unclear or unable to be fulfilled.
In short, if it appears the decedent did not intend to name a particular beneficiary, the designation is ambiguous or invalid, or the beneficiary is unable or unwilling to accept the inheritance, the account may be treated as an estate asset subject to probate.
In some cases, a valid will can help clarify the decedent’s intent — especially if it includes a residuary clause specifying who should inherit assets not otherwise addressed. If no will exists or it lacks relevant terms, intestate succession laws could determine who inherits the account in the absence of a named beneficiary. However, in both these scenarios, probate would still be required.
Below are key scenarios in which a bank account with a named beneficiary may still become a probate asset.
The beneficiary designation is the result of undue influence or fraud.
To be valid, a bank account beneficiary designation must reflect the decedent’s true and voluntary intent. If there is evidence that the decedent was coerced, manipulated or deceived into changing the designation, it may be invalidated by the probate court with the filing of a petition.
Suppose a decedent originally named their children as beneficiaries of a bank account. Shortly before death, they change the designation to their new spouse. The children suspect undue influence and file a contest. If the court agrees and invalidates the change, the account will become part of the estate and be distributed through probate.
The account holder lacked the mental competence required to name a beneficiary.
Signing a Totten trust (the form used to name a beneficiary and convert a regular bank account into a POD account) requires the account holder to be mentally competent. This means understanding the purpose of the document, the nature of the asset and the effect of naming a beneficiary.
If the account holder lacked the capacity needed to sign the document, the beneficiary designation could be invalidated, subjecting the account to probate.
Suppose a person diagnosed with late-stage Alzheimer’s signs a Totten trust naming a friend as the beneficiary. If there’s medical documentation showing the diagnosis predates the signing, the designation may be voided, making the account part of the probate estate.
The beneficiary designation was improperly executed.
Each financial institution has its own rules for setting up a POD account. If the designation fails to comply with those requirements, it may be considered invalid.
Suppose a Totten trust was signed but not notarized, despite the bank’s requirement. Or the account holder forgot to name a beneficiary. In either case, the account may default to the estate and require probate.
Because banks can face legal liability for releasing a POD account to the wrong beneficiary, they typically will not honor a beneficiary designation if its validity or intent is in question.
The beneficiary designation was made by mistake.
If a decedent signed a Totten trust without understanding what it was — or thought they were signing a different type of document — their mistake can be grounds to contest the designation.
Suppose a decedent believed they were opening a standard bank account and did not realize the form named a beneficiary. If contested and proven, the court may void the designation, sending the account through the probate process.
The beneficiary designation is unclear or ambiguous.
Vague or conflicting language — such as using a nickname, listing multiple beneficiaries without instructions or naming someone with a common name shared by more than one person — can make a bank account beneficiary designation legally uncertain. And since banks don’t typically honor such designations, probate may be required to clarify the designation, if clarifying it is even possible.
Suppose a decedent names “John Smith” as beneficiary, but both a son and grandson share that name. A court may need to review extrinsic evidence (including the will, witness testimony, etc.) to determine the intended recipient. For example, if the will expressly disinherits the son, and family members testify that the decedent wished for the son to receive nothing, the court may conclude the intended beneficiary is the grandson.
When a petition for instructions can clarify an ambiguity without invalidating the designation, probate may not be necessary. However, if the court cannot determine intent, the account will likely need to be probated.
The named beneficiary predeceased the account holder.
If the named beneficiary on a bank account dies before the account holder, and no contingent beneficiary is named, the account cannot transfer directly, resulting in it having to pass through probate.
Suppose a spouse is named as a bank account beneficiary but dies first. If no alternate beneficiary is named, the account would become a probate asset, which can be used to pay probate fees, taxes, debts and other necessary expenses. Whatever remains of the account will be distributed according to the terms of the will or intestate succession laws at the close of probate.
The named beneficiary disclaims the inheritance.
A bank beneficiary may choose to disclaim (i.e., legally refuse) an inheritance for reasons such as tax implications, loss of government benefits or personal preference.
If there’s no contingent beneficiary named, the account generally will need to be probated to determine the beneficiary or heir who is entitled to receive the funds in place of the bank beneficiary who disclaimed their inheritance.
There is a legal dispute over the account.
Property disputes may arise between the named beneficiary and someone else who claims a legal or financial interest in the bank account. When such disputes arise, the account could become subject to probate.
Suppose a surviving spouse claims that funds in a POD account were community property, despite the decedent naming their sister as beneficiary. Or a will executed after the beneficiary designation contradicts the designation. Either situation could trigger a probate proceeding to determine true ownership.
The named beneficiary is the account holder’s estate.
If the beneficiary designation explicitly names the account holder’s estate as the recipient, the account becomes a probate asset by design.
While legal, designating an estate as a bank beneficiary defeats the main advantage of POD accounts — which is to avoid probate — and exposes the funds to creditor claims, delays and court oversight.
Takeaway: Can Probate Be Avoided When Bank Accounts Have Beneficiaries?
In most cases, bank accounts with beneficiaries do not have to go through probate. But this is not guaranteed. If the beneficiary designation is unclear, invalid or disputed, the account may become part of the estate and require probate.
If you’re facing a dispute over a POD account — or want to protect your rights as a beneficiary — an experienced probate attorney can help. They can assess your situation, resolve complex legal questions and enforce your rights.
FAQs: Probate and Bank Accounts
Still wondering when bank accounts with beneficiaries have to go through probate? Below, we’ve answered some of the most common questions to help you better understand how POD accounts work.
If you need personalized legal guidance regarding a deceased person’s bank account, our probate attorneys are available to assist.
Are bank accounts considered personal property in a will?
Yes, bank accounts are generally considered intangible personal property in a will, as personal property includes all assets that are not real estate. However, bank accounts with beneficiaries usually bypass the will entirely and transfer directly to the named beneficiary, making their classification in the will irrelevant in those cases.
If there’s no beneficiary listed on a bank account — and the account isn’t held in trust — it will typically pass to the decedent’s estate. In such an instance, the account would be classified as personal property and be distributed through probate.
For instance, if a will states that “all personal property shall be divided among my immediate family,” then the bank account would be included in that distribution.
Can beneficiaries on bank accounts be contested?
Yes, beneficiaries on bank accounts can be contested, but only if you have both standing and valid legal grounds. Standing means you stand to benefit financially if the designation is overturned. Grounds might include undue influence, fraud, lack of capacity or an ambiguous designation.
It’s important to keep in mind that contesting a POD account can be time-sensitive. Beneficiaries can often withdraw funds immediately after the account holder’s death, meaning recovery may involve not only invalidating the designation but also recovering the distributed funds. Working with a probate attorney early in the process is crucial to protect your interests and maximize your chances of success.
Do joint bank accounts avoid probate?
Generally, yes. Joint bank accounts avoid probate because of the right of survivorship, which allows surviving co-owners to automatically assume full ownership of the account when a co-owner dies. The transition is seamless and does not interrupt access to the funds.
However, problems can arise. If someone contests the validity of the survivorship designation — perhaps claiming undue influence or lack of capacity — the account may need to pass through probate to determine the rightful recipient of the decedent’s share.
Do payable-on-death accounts avoid probate?
Yes, payable-on-death accounts — also referred to as bank accounts with beneficiaries — are specifically designed to bypass probate.
The named beneficiary can claim the funds directly from the financial institution after the account holder’s death, without court involvement, provided the designation is clear and undisputed.
Do bank accounts with no beneficiary always require probate?
In most cases, yes. Bank accounts without a beneficiary designation typically become part of the decedent’s probate estate and must go through the probate process.
However, there are some exceptions:
- If the total value of the estate’s personal property is under $208,850 (as of April 2025), shortcut probate procedures, such as a small estate affidavit or spousal property petition, may be available.
- If the account is titled in the name of the decedent’s trust, it usually avoids probate altogether and is instead distributed per the terms of the trust.
These exceptions can significantly reduce the time and cost associated with a formal probate.
Still have questions about bank accounts with beneficiaries?
Bank accounts with beneficiaries are meant to simplify estate administration, but when disputes, ambiguity or errors arise, they can create significant legal challenges. If you’re unsure about your rights or what to do next, you don’t have to navigate the process alone.
Our experienced probate attorneys can help you understand the rules, resolve disputes and ensure your deceased loved one’s assets end up in the right hands. Call us today to speak with a member of our legal team.
