Your Beneficiary Designations Probably Override Your Will (And Most People Haven’t Looked at Them in Years)
A question that comes up a lot in our community, especially after people read our piece on why adding yourself to mom’s bank account can backfire, is “what about POD and TOD?” It is a great question, and the answer involves one of the most common estate planning gaps we see, one that has nothing to do with not having a will and everything to do with a form you probably filled out years ago and never thought about again.
Here is the short version: your POD and TOD designations generally take precedence over your will. The bank typically follows the form on file, not your wishes as written elsewhere. And if that form is outdated, or if it has a gap in it, the consequences tend to surface at the worst possible time.
This is for general educational purposes only and does not constitute legal advice. Estate planning laws vary by state. Mitzi is not a law firm. Please consult a licensed attorney for guidance specific to your situation.
A Quick Overview on What These Are
POD, or payable on death, is commonly used for bank accounts. TOD, or transfer on death, is commonly used for investment and brokerage accounts. Both are designed to allow assets to pass directly to a named beneficiary outside of probate, which is generally considered one of their main advantages.
But because these designations typically take precedence over a will, what is written on the form generally controls where the money goes, regardless of what your will says. That is the part most people do not fully absorb when they fill out the form at account opening.
The Two Mistakes That Come Up All the Time
Mistake 1: One name, no backup.
A lot of people named someone when they opened the account and left the contingent beneficiary field blank. If the person you named passes away before you, or at the same time, that account generally falls back into your estate. And now it is headed to probate, which is often exactly what the designation was meant to avoid.
This is a straightforward fix, and it is worth checking every account you have.
Mistake 2: Life changed. The form did not.
A divorce. Another child. A falling out with someone who is still listed. The bank generally follows the form on file, not the will, not the updated wishes, not the conversation you had. Whatever name is on the account is typically where the money goes.
This is the one that tends to surface in the most painful ways, often after someone has passed and the family is discovering for the first time that the assets went somewhere nobody expected.
The Question That Always Comes Up: “What About Access While I’m Alive?”
Here is where people often pause. POD and TOD designations are designed to do one thing: move money to your beneficiary after you pass away. While you are alive, the person you named generally has no rights to the account at all. They cannot see it, manage it, or step in if you become unable to handle things yourself.
That last part is the gap people tend to miss. If you were ever incapacitated — an illness, an accident, a stretch where you could not manage your own finances — a POD or TOD beneficiary generally could not help, because the designation has not taken effect yet. (This is also part of why adding someone as a joint owner to solve the problem can backfire, as we covered here.)
So how do people generally handle the living side of this? A few common approaches:
The combination approach. Many people pair their POD and TOD designations with a financial power of attorney. The beneficiary designation handles the transfer at death; a financial power of attorney is commonly used to name a trusted person who can manage or access your accounts on your behalf while you are alive, including if you become incapacitated. Together, they are designed to cover both moments.
Naming your trust as the beneficiary. Another route is to keep the account in your own name but name your revocable living trust as the POD or TOD beneficiary. At death, the account generally passes to the trust outside of probate, and the trust’s terms then control how it is distributed — helpful when you want the money to flow into a trust rather than directly to an individual. On its own, though, this mainly addresses the transfer-at-death side: while you are alive the account is still yours, so the trust generally has no authority over it if you become incapacitated. For that reason, people often still pair it with a financial power of attorney.
Retitling the account into the trust. A different route is to make the trust the owner of the account by retitling it in the trust’s name. Because the trust owns the account while you are alive, a successor trustee is commonly able to step in and manage it if you cannot, and the trust’s terms generally govern where it goes at death — typically outside of probate. This is the version that is designed to address both incapacity and transfer in one structure.
Which of these fits depends a lot on your situation: how many accounts you have, whether you own property in more than one state, and how complex your family picture is. A revocable living trust involves more upfront planning than a beneficiary form, so it is worth talking through with an estate planning attorney who knows your full picture.
A Few Things That Generally Help
Naming a contingent beneficiary on every POD and TOD account is one of the simplest gaps to close — it takes a few minutes.
Reviewing your designations every couple of years is commonly recommended, particularly after major life events: a marriage, a divorce, a death in the family, a new child. These are the moments when the form is most likely to be out of step with your actual wishes.
For families with multiple accounts, real estate in different states, or more complex situations, a properly funded revocable living trust is another route people consider. It can offer more coordinated control over how assets move, though it involves more planning and is worth discussing with an attorney who knows your full picture.
This is a common pattern. People who have done the work of making a will, who feel like they have their plan together, discovering that accounts they set up years ago are pointed somewhere else entirely. Getting your foundational documents in place matters, and so does making sure your accounts are aligned with them.
If you live in Michigan, you can get started for $99 right here. If you are anywhere else, take our Prepare to Plan Quiz for a free personalized checklist. We will also add you to our waitlist so we can let you know the minute we are live in your state.
Frequently Asked Questions
What is the difference between POD and TOD?
POD stands for payable on death and is typically used for bank accounts. TOD stands for transfer on death and is typically used for investment and brokerage accounts. Both are commonly used to allow assets to pass directly to a named beneficiary outside of probate. Estate planning laws vary by state, so it is worth understanding how these designations work in your specific situation.
Do beneficiary designations override a will?
In most cases, yes. POD and TOD designations generally take precedence over what is written in a will. The bank or financial institution typically pays out to whoever is named on the account form, regardless of what a will says. This is why keeping these designations current is considered an important part of estate planning.
What happens if my POD or TOD beneficiary dies before me?
If your named beneficiary predeceases you and you have not named a contingent beneficiary, that account generally falls back into your estate and may go through probate. Naming a contingent beneficiary on every account is commonly recommended to help avoid this outcome.
Can my POD or TOD beneficiary access my account while I’m alive?
Generally, no. POD and TOD designations are designed to transfer assets only after you pass away, so the person you name typically has no right to see or manage the account while you are living. To allow a trusted person to help during your lifetime, including if you become incapacitated, people commonly use a financial power of attorney, or hold the account through a revocable living trust. These tools are designed to address the “during life” side that a beneficiary designation does not cover.
How often should I review my beneficiary designations?
Reviewing beneficiary designations every couple of years is commonly recommended, and especially after major life events such as a marriage, divorce, the birth of a child, or the death of a named beneficiary. These are the moments when a form filled out years ago is most likely to be out of step with your current wishes.
What is a contingent beneficiary?
A contingent beneficiary is a backup beneficiary who receives the assets if your primary beneficiary is unable to. Naming a contingent beneficiary on POD and TOD accounts is one of the simplest steps you can take to help ensure your assets go where you intend.
What is a revocable living trust and when is it worth considering?
A revocable living trust is a planning tool that can offer more coordinated control over how assets are held and transferred, particularly for people with multiple accounts, real estate in different states, or more complex family situations. It generally requires more upfront planning than a simple beneficiary designation and is worth discussing with an estate planning attorney who knows your full picture.
This is for general educational purposes only and does not constitute legal advice. Estate planning laws vary by state. Mitzi is not a law firm. Please consult a licensed attorney for guidance specific to your situation.
