Should You Add a POD or Cosigner to Your Bank Account?

Be aware of the differences when adding another person to your bank account. Your circumstances (health, age, travel, etc.) will determine who may need access. A POD or cosigner will typically supersede wishes made in a will. 

Payable On Death (POD): A POD will add a beneficiary to your checking and/or savings accounts at your bank. The beneficiary only gets access to your account once you have died. Each bank will have its own Payable on Death form for you to complete. They will keep the form on file. 

Benefits of a POD

• Gives the beneficiary immediate access to your accounts upon your death.

• Beneficiary does not have access to your accounts while you are alive.

• May avoid probate in some states.

• POD can be changed or terminated at any time through your bank (prior to death).

Drawbacks of a POD

• Your beneficiary will not have the ability to pay your bills if you have an accident or health emergency.

• Your Executor/Personal Representative may not be able to pay bills and settle accounts (after death) if the beneficiary has taken the money.

• If you have a minor listed as your beneficiary, they will not get full access to the money until they are age 18.

Cosigner: You may consider adding a cosigner to your bank account. This person will be able to help you if you are unable to pay your bills. They will have full access to your account. Your bank will be able to complete the proper forms. If you decide to remove the cosigner at a later date, you will need all parties to sign a release form. You may need to open a new account in your name only.

Benefits of a cosigner

• Prior to death, a cosigner will be able to pay your bills if needed for a medical emergency, accident or time away from your home.

• May avoid probate in some states.

• Cosigner has continued access to funds after death.

Drawbacks of a cosigner

• Upon death, the cosigner will have full control of the account, and the beneficiary will not have any access.

• Adding a person to your account opens the door to mismanagement and co-mingling of funds.

• You may become liable for the cosigner's debt obligations.

Additional considerations: Please check with your bank, your financial advisor, your estate planner! This post is meant for general informational purposes only. Laws and regulations will vary by state. Each person’s circumstance will vary and change throughout their lifetime.