Dec252025
Probate Q&A Series

How do bank beneficiary designations and CDs get handled when there is a will? – North Carolina

Short Answer

In North Carolina, a valid bank beneficiary designation (often called “POD,” payable-on-death) generally controls that account or CD, even if the will leaves that same money to someone else. In other words, many bank accounts and CDs pass by the account contract, not by the will. However, these “non-probate” transfers can still be pulled back (recovered) by the estate’s personal representative if the probate estate does not have enough assets to pay certain claims, such as the surviving spouse’s year’s allowance and creditors.

Understanding the Problem

When a North Carolina resident dies with a will, the executor named in the will often expects the will to control every asset. The key decision point is whether a particular bank account or certificate of deposit has a beneficiary designation or survivorship title that causes the asset to transfer at death outside the estate. If the account or CD transfers outside the estate, the will usually does not control who receives it, even though the asset may still matter for paying certain estate claims.

Apply the Law

North Carolina treats many bank accounts, including certain certificates of deposit, as contract-based transfers at death when the account is set up as payable-on-death (POD) or as a joint account with right of survivorship. In those situations, ownership can pass automatically at death to the named beneficiary or surviving joint owner when the financial institution receives proof of death. Even so, North Carolina law allows a personal representative (executor/administrator) to seek recovery of some or all of those funds from the recipient when the estate does not have enough “probate” assets to pay priority claims and debts.

Key Requirements

  • Account type controls: A POD designation or survivorship titling generally transfers the account or CD outside the will and outside the probate estate.
  • Proper written setup matters: POD and survivorship status depends on what was actually signed with the bank or credit union (often a signature card or account agreement).
  • Estate recovery is still possible: If the probate estate cannot cover priority items (like the surviving spouse’s year’s allowance), administration costs, funeral expenses, and creditor claims, the personal representative may be able to recover funds from POD beneficiaries or surviving joint owners.

What the Statutes Say

Analysis

Apply the Rule to the Facts: One bank account has already been confirmed as having a beneficiary, which usually means it passes directly to that beneficiary and not under the will. The CDs and other accounts may be different depending on whether each CD/account is titled as POD, joint with survivorship, or solely owned with no beneficiary designation. If the estate has not been opened and no executor has qualified, there may be no personal representative yet with authority to gather estate assets or pursue recovery of non-probate funds for priority claims like the spouse’s year’s allowance.

Process & Timing

  1. Who files: The person named as executor in the will (or another qualified person if the named executor does not act). Where: Clerk of Superior Court (Estates Division) in the North Carolina county with proper venue. What: Application to probate the will and to qualify as personal representative (commonly results in issuance of “letters testamentary” if approved). When: As soon as practical after death, especially when accounts, CDs, or a year’s allowance claim are in play.
  2. Bank/CD payouts: A POD beneficiary typically works directly with the financial institution and provides proof of death and identity to request payment or retitling. A surviving joint owner typically follows a similar process for a survivorship account.
  3. Estate recovery (if needed): If the probate estate lacks funds to pay administration costs, funeral expenses, the spouse’s year’s allowance, and valid creditor claims, the qualified personal representative may seek recovery from POD beneficiaries or surviving joint owners (often through an estate proceeding before the Clerk of Superior Court or a civil action in Superior Court, depending on the issue).

Exceptions & Pitfalls

  • Not every CD is POD: Some CDs are titled to one person with no beneficiary; those typically become estate assets controlled by the will after the executor qualifies.
  • Paperwork controls, not assumptions: North Carolina law relies heavily on the written account agreement/signature card. If the paperwork does not meet statutory requirements for POD or survivorship, the bank may treat the funds as part of the probate estate.
  • Debts and allowances can reach “non-probate” money: Even when an account transfers at death, the recipient may still face a recovery claim if the estate lacks funds to pay priority items (including the year’s allowance listed in the survivorship statute for joint accounts).
  • Delay can create leverage problems: When no estate is opened, there is no court-supervised personal representative to marshal information, demand records, or pursue recovery. Delay can also complicate disputes about post-death transfers or changes in control of assets.

Conclusion

In North Carolina, bank accounts and CDs with a valid POD beneficiary or survivorship titling usually pass directly to the named person and are not controlled by the will. The will generally controls only assets that are part of the probate estate (such as solely owned accounts with no beneficiary). Even so, the estate may be able to recover some non-probate funds to pay priority items like the surviving spouse’s year’s allowance and other valid claims if the estate lacks assets. The next step is to open the estate and qualify a personal representative with the Clerk of Superior Court.

Talk to a Probate Attorney

If there is a will but bank accounts or CDs appear to be passing by beneficiary designation or survivorship, a probate case often needs quick, organized action to confirm how each account is titled and to protect deadlines for claims and challenges. Our firm has experienced attorneys who can help explain the options and timelines. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Probate Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.