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Six Reasons Why You Need a Beneficiary on Your Deposit Account

February 29, 2024
Maintaining your finances while you’re living is essential, but having things prepared for your spouse, children, and loved ones after your death is just as important.

This type of preparation includes adding payable on death (POD) beneficiaries to your bank accounts. In the event of your death, your named beneficiaries are entitled to collect a distribution from your bank account.

Knowing who your beneficiaries are can keep your loved ones at ease because they can adequately make arrangements on your behalf and take care of any bills and business you may be leaving behind.

If you have yet to add beneficiaries to your bank accounts, now may be a good time to do so. And it only takes at most five minutes to set your heirs up for success and ease of mind. You should always consult a qualified attorney for specific questions about your estate plan or the probate process.

Here are six reasons to add a beneficiary to your account:

1. Simple transition of the account
Listing your heirs makes it clear who inherits the account when you pass away. If your beneficiaries are already assigned to your accounts, the assets will pass to them by contract. If a beneficiary is not named, your heirs may have to go through probate, a legal process for settling an estate after someone dies. That makes beneficiary designations — up-to-date ones — extremely important.

2. Allow your loved ones to quickly access the funds
Failure to list a beneficiary could mean it goes to the deceased account holder’s estate. This can drastically increase the time before an heir can inherit the account. The probate process for the estate can take months, at a minimum, or years. 

3. Allows you to have greater control
If your account goes through the probate process, distribution of the assets is carried out in a specific order, either according to your will or state law if you died without a will. When you list beneficiaries, you have the control to put whomever you want and in whatever order you wish. You may not have that control if the distribution of the account gets defaulted to your estate.

4. Fewer costs to your beneficiaries
By simply listing a beneficiary, your heirs can avoid having the account go through probate. Depending on your estate plan, the probate process can cost thousands of dollars. 

5. It eases stress for your heirs
Taking care of this simple step can ease a heavy burden for your beneficiaries, so they’re not untangling your finances while they’re grieving. Once the beneficiary notices is us the death of the account owner, they are entitled to access their funds. The beneficiary will need to provide necessary documentation, like a death certificate, but that process is significantly less involved than probate.

6. You recently experienced a life change
After a significant life change, like getting married or having a child, updating or adding beneficiary elections is important. No one likes to think about an unexpected death — especially not right after a happy event — but it can happen, so it’s best to be prepared.

You should review your beneficiaries every year to make any changes if needed. You can update the beneficiaries by visiting a branch.

If you ever have concerns or questions, we are here to assist you. 

This information is provided for informational purposes regarding accounts held at Middlesex Savings Bank only and not for the purpose of providing legal, tax, financial planning, or investment advice. Middlesex Savings Bank encourages you to consult a professional for advice applicable to your specific situation.
by Middlesex Savings Bank