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Savings Account

Beneficiary Meaning in Bank - What is Beneficiary Account

Summary: Beneficiary account is a type of savings account in which funds are transferred to the beneficiary after the death of account owner. Explore in detail here.

07 Dec 2021 by Team FinFIRST

Learn all about a beneficiary account and browse through some of the related FAQs which have been answered for you


One might think of IRAs, trust funds, mutual funds and other assets, or even life insurance plans when you hear the term "beneficiary account." Do any of your bank or investment accounts have a designated account beneficiary? While you may have heard of the term, you might be unclear on what it exactly is. If you want to know what beneficiary means and what a beneficiary bank account is, read on. 

What is a beneficiary account?


In simple words, a beneficiary bank account is a type of savings account in which the funds are transferred to somebody else after the account owner passes away. Beneficiaries are not only named for life insurance, retirement funds, or huge investments, but also for a bank account. Your beneficiary would be a person/s who you would wish to get your money after your passing.

Establishing a beneficiary bank account will keep the funds in your bank account out of litigation when you pass away. If you do not have a beneficiary bank account, your funds may get caught up in probate, which is a legal process that settles whether a will or trust is valid, or who receives your estate if you don't leave a will. If you have a beneficiary account, the funds in that account will be transferred to the beneficiary automatically. This may assist your loved ones in covering funeral expenditures as well as ongoing needs such as rent, loans, and utility costs.

Beneficiaries do not have access to your account while you are alive. They won't be able to take money from your account until you provide them with your debit card and PIN. If your beneficiary faces charges, owes taxes, or falls into serious debt, their creditors cannot access the funds in your account.

 

 

How can I open a beneficiary account?


Customers can easily open a beneficiary account or add a beneficiary designation to a pre-existing account at most financial institutions. To open bank account online, all you need to do is go to the website of a bank and follow the steps on your screen. You could also open an account by visiting your bank branch and asking your teller to open an account for you. 

However, unlike other sorts of accounts, such as IRAs, you must ask for a beneficiary on a bank account. You are not forced to have a named beneficiary on a bank account. As a regular feature on checking, savings account, and money market accounts, most financial institutions now provide beneficiary accounts that are "payable on death," or POD accounts.

Documents required to open a beneficiary account


Opening a beneficiary account or adding a specified beneficiary to an existing one are simple processes. Request the forms from your bank to designate a beneficiary for your account. Your bank should be able to offer you papers, which are known as a Totten Trust. On the same piece of paper, you can specify a primary and contingent beneficiary. The beneficiaries do not need to be present and nor do they need to sign any paperwork.

A beneficiary bank account is a type of savings account in which the funds are transferred to somebody else after the account owner passes away.

Do I need a living trust if I have a beneficiary account?


You may wish to set up a flexible living trust if you have various accounts, investments, and valuables. A living trust entrusts all of your assets to you and gives you ultimate authority over them during your lifetime. Following your death, your "successor trustee" would operate on your behalf, transferring assets to your beneficiaries. During your lifetime, you can replace your successor trustee – or "revoke" their trusteeship.

If you are on the lookout for the best savings bank for adding a beneficiary to, you need to look no further than IDFC FIRST Bank. You can open an instant bank account with us and get the best savings bank account interest rates in the market. Browse our website for further details. 

 

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