Watch CBS News

CD account beneficiaries: Everything to know

Accumulating wealth - Man's hand
Listing a beneficiary on your CD account can be an important component of keeping your finances in order.  Getty Images

High and persistent inflation over the past couple of years has caused interest rates to rise, and while that's made borrowing costs more expensive, it's also helped savers earn a higher return on their cash.

For accounts like certificates of deposit (CDs), high interest rates can mean earning upward of a 5% annual percentage yield (APY), depending on factors like the CD term. With these high CD rates, it's all the more important to ensure that in the event you pass away, your returns pass on to whoever you'd like to receive those funds.

That's where a CD account beneficiary comes in. We'll take a closer look at the most important things to know about CD account beneficiaries below.

Explore today's best CD account rates online now.

What is a CD account beneficiary?

You may have come across the term beneficiary in other areas of your finances, like when setting up a checking account or a retirement account.

"A CD account beneficiary is like the beneficiary on any financial account: simply the person who will inherit the account if the owner of the CD passes away," says Saeid Kian, CEO and co-founder, Ribbon Financial.

How do you list a CD account beneficiary?

Listing a CD account beneficiary — or beneficiaries, such as if you want to split the assets among multiple family members, for instance — tends to be a straightforward process.

"For most institutions, you can list the beneficiary online. There's usually a section to list beneficiaries in the profile section that allows you to add beneficiaries, though different institutions have different ways of updating beneficiaries. Institutions try to make this easy to avoid the headache of transferring over accounts when no beneficiaries are listed," says Kian.

If you can't list the beneficiary online, you might need to fill out some basic paperwork.

"Typically, you need to contact the financial institution, then request beneficiary designation forms and provide your information and the beneficiary's personal information — such as name, address, Social Security number and date of birth. Review and sign the form and submit it to the institution," explains Justin Stivers, financial advisor and founding attorney at Stivers Law.

Find out the top rates you could earn on today's best CD accounts here.

What are the rules for CD account beneficiaries?

CD account beneficiary rules can differ a bit based on the financial institution you open the CD with, but these tend to be relatively simple.

"Usually, there are basic rules, such as all the owners of the CD must have passed away for it to go to a beneficiary and that the beneficiary themselves should be living," says Kian.

There can also be rules around who can be listed as a beneficiary.

"For example, you may not be able to put a minor," says Stivers. And "depending on the state's laws, you may have to put a spouse on certain types of accounts."

Some CD accounts also give you the option to add both primary and contingent beneficiaries, he adds. 

That means if your initial beneficiary passes away before they can claim the CD funds, your contingent beneficiary could claim them.

Also, "some designations can be changed, but others might be irrevocable, meaning they can't be changed," says Stivers.

If you're not sure what rules apply, ask.

"Checking with your institution is the safest bet to make sure," says Kian.

What happens if you don't have a beneficiary listed?

If you don't have a CD account beneficiary listed, that could make your estate more complicated, unless someone like your spouse is the beneficiary by default.

"It depends, but there could be a default beneficiary designation depending on the type of account and/or institution. More likely though, there will be a probate process in which those funds will have to pass through probate and will go to your heirs at law or to the people named in your will or trust, if you have one," says Stivers.

It's also possible that none of your heirs end up receiving the CD funds, such as if you don't have a will and the probate court can't find your heirs.

"After a certain amount of time, if no one claims the money, it could end up with the state," says Stivers.

Do beneficiaries need to pay taxes on interest earned?

The tax implications for CDs can vary based on the type of CD account the funds are held in. But in general, CD interest is only taxable after your beneficiary takes over.

"It really depends on various factors such as if the funds from the CD account are rolled over into an inherited IRA. However, in most cases, beneficiaries who inherit funds from a CD account do not pay taxes on the principal amount they receive, while interest earned on the CD account after the original account holder's passing is typically considered taxable income to the beneficiary," says Stivers.

That said, depending on the amount inherited, it's possible more could be taxed.

"Generally, tax is not paid on inherited accounts, but there are limits in which estate taxes kick in, and different circumstances have different tax consequences. Check with your tax advisor," says Kian.

The bottom line

Overall, designating a CD account beneficiary is typically a straightforward process, and it's an important way to help ensure your funds pass on according to your wishes if you die before the CD matures. If you're opening a CD now to take advantage of high interest rates, especially before the Fed starts cutting interest rates as many expect, take a few minutes extra to also designate your CD account beneficiaries.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
seductrice.net
universo-virtual.com
buytrendz.net
thisforall.net
benchpressgains.com
qthzb.com
mindhunter9.com
dwjqp1.com
secure-signup.net
ahaayy.com
tressesindia.com
puresybian.com
krpano-chs.com
cre8workshop.com
hdkino.org
peixun021.com
qz786.com
utahperformingartscenter.org
worldqrmconference.com
shangyuwh.com
eejssdfsdfdfjsd.com
playminecraftfreeonline.com
trekvietnamtour.com
your-business-articles.com
essaywritingservice10.com
hindusamaaj.com
joggingvideo.com
wandercoups.com
wormblaster.net
tongchengchuyange0004.com
internetknowing.com
breachurch.com
peachesnginburlesque.com
dataarchitectoo.com
clientfunnelformula.com
30pps.com
cherylroll.com
ks2252.com
prowp.net
webmanicura.com
sofietsshotel.com
facetorch.com
nylawyerreview.com
apapromotions.com
shareparelli.com
goeaglepointe.com
thegreenmanpubphuket.com
karotorossian.com
publicsensor.com
taiwandefence.com
epcsur.com
southstills.com
tvtv98.com
thewellington-hotel.com
bccaipiao.com
colectoresindustrialesgs.com
shenanddcg.com
capriartfilmfestival.com
replicabreitlingsale.com
thaiamarinnewtoncorner.com
gkmcww.com
mbnkbj.com
andrewbrennandesign.com
cod54.com
luobinzhang.com
faithfirst.net
zjyc28.com
tongchengjinyeyouyue0004.com
nhuan6.com
kftz5k.com
oldgardensflowers.com
lightupthefloor.com
bahamamamas-stjohns.com
ly2818.com
905onthebay.com
fonemenu.com
notanothermovie.com
ukrainehighclassescort.com
meincmagazine.com
av-5858.com
yallerdawg.com
donkeythemovie.com
corporatehospitalitygroup.com
boboyy88.com
miteinander-lernen.com
dannayconsulting.com
officialtomsshoesoutletstore.com
forsale-amoxil-amoxicillin.net
generictadalafil-canada.net
guitarlessonseastlondon.com
lesliesrestaurants.com
mattyno9.com
nri-homeloans.com
rtgvisas-qatar.com
salbutamolventolinonline.net
sportsinjuries.info
wedsna.com
rgkntk.com
bkkmarketplace.com
zxqcwx.com
breakupprogram.com
boxcardc.com
unblockyoutubeindonesia.com
fabulousbookmark.com
beat-the.com
guatemala-sailfishing-vacations-charters.com
magie-marketing.com
kingstonliteracy.com
guitaraffinity.com
eurelookinggoodapparel.com
howtolosecheekfat.net
marioncma.org
oliviadavismusic.com
shantelcampbellrealestate.com
shopleborn13.com
topindiafree.com
v-visitors.net
djjky.com
053hh.com
originbluei.com
baucishotel.com
33kkn.com
intrinsiqresearch.com
mariaescort-kiev.com
mymaguk.com
sponsored4u.com
crimsonclass.com
bataillenavale.com
searchtile.com
ze-stribrnych-struh.com
zenithalhype.com
modalpkv.com
bouisset-lafforgue.com
useupload.com
37r.net
autoankauf-muenster.com
bantinbongda.net
bilgius.com
brabustermagazine.com
indigrow.org
miicrosofts.net
mysmiletravel.com
selinasims.com
spellcubesapp.com
usa-faction.com
hypoallergenicdogsnames.com
dailyupdatez.com
foodphotographyreviews.com
cricutcom-setup.com
chprowebdesign.com
katyrealty-kanepa.com
tasramar.com
bilgipinari.org
four-am.com
indiarepublicday.com
inquick-enbooks.com
iracmpi.com
kakaschoenen.com
lsm99flash.com
nana1255.com
ngen-niagara.com
technwzs.com
virtualonlinecasino1345.com
wallpapertop.net
casino-natali.com
iprofit-internet.com
denochemexicana.com
eventhalfkg.com
medcon-taiwan.com
life-himawari.com
myriamshomes.com
nightmarevue.com
healthandfitnesslives.com
androidnews-jp.com
allstarsru.com
bestofthebuckeyestate.com
bestofthefirststate.com
bestwireless7.com
britsmile.com
declarationintermittent.com
findhereall.com
jingyou888.com
lsm99deal.com
lsm99galaxy.com
moozatech.com
nuagh.com
patliyo.com
philomenamagikz.net
rckouba.net
saturnunipessoallda.com
tallahasseefrolics.com
thematurehardcore.net
totalenvironment-inthatquietearth.com
velislavakaymakanova.com
vermontenergetic.com
kakakpintar.com
begorgeouslady.com
1800birks4u.com
2wheelstogo.com
6strip4you.com
bigdata-world.net
emailandco.net
gacapal.com
jharpost.com
krishnaastro.com
lsm99credit.com
mascalzonicampani.com
sitemapxml.org
thecityslums.net
topagh.com
flairnetwebdesign.com
rajasthancarservices.com
bangkaeair.com
beneventocoupon.com
noternet.org
oqtive.com
smilebrightrx.com
decollage-etiquette.com
1millionbestdownloads.com
7658.info
bidbass.com
devlopworldtech.com
digitalmarketingrajkot.com
fluginfo.net
naqlafshk.com
passion-decouverte.com
playsirius.com
spacceleratorintl.com
stikyballs.com
top10way.com
yokidsyogurt.com
zszyhl.com
16firthcrescent.com
abogadolaboralistamd.com
apk2wap.com
aromacremeria.com
banparacard.com
bosmanraws.com
businessproviderblog.com
caltonosa.com
calvaryrevivalchurch.org
chastenedsoulwithabrokenheart.com
cheminotsgardcevennes.com
cooksspot.com
cqxzpt.com
deesywig.com
deltacartoonmaps.com
despixelsetdeshommes.com
duocoracaobrasileiro.com
fareshopbd.com
goodpainspills.com
hemendekor.com
kobisitecdn.com
makaigoods.com
mgs1454.com
piccadillyresidences.com
radiolaondafresca.com
rubendorf.com
searchengineimprov.com
sellmyhrvahome.com
shugahouseessentials.com
sonihullquad.com
subtractkilos.com
valeriekelmansky.com
vipasdigitalmarketing.com
voolivrerj.com
zeelonggroup.com
1015southrockhill.com
10x10b.com
111-online-casinos.com
191cb.com
3665arpentunitd.com
aitesonics.com
bag-shokunin.com
brightotech.com
communication-digitale-services.com
covoakland.org
dariaprimapack.com
freefortniteaccountss.com
gatebizglobal.com
global1entertainmentnews.com
greatytene.com
hiroshiwakita.com
iktodaypk.com
jahatsakong.com
meadowbrookgolfgroup.com
newsbharati.net
platinumstudiosdesign.com
slotxogamesplay.com
strikestaruk.com
trucosdefortnite.com
ufabetrune.com
weddedtowhitmore.com
12940brycecanyonunitb.com
1311dietrichoaks.com
2monarchtraceunit303.com
601legendhill.com
850elaine.com
adieusolasomade.com
andora-ke.com
bestslotxogames.com
cannagomcallen.com
endlesslyhot.com
iestpjva.com
ouqprint.com
pwmaplefest.com
qtylmr.com
rb88betting.com
buscadogues.com
1007macfm.com
born-wild.com
growthinvests.com
promocode-casino.com
proyectogalgoargentina.com
wbthompson-art.com
whitemountainwheels.com
7thavehvl.com
developmethis.com
funkydogbowties.com
travelodgegrandjunction.com
gao-town.com
globalmarketsuite.com
blogshippo.com
hdbka.com
proboards67.com
outletonline-michaelkors.com
kalkis-research.com
thuthuatit.net
buckcash.com
hollistercanada.com
docterror.com
asadart.com
vmayke.org
erwincomputers.com
dirimart.org
okkii.com
loteriasdecehegin.com
mountanalog.com
healingtaobritain.com
ttxmonitor.com
nwordpress.com
11bolabonanza.com