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“In trust for” (ITF) and “payable on death” (POD) are two designations that you can use to pass on bank accounts or other financial accounts after you’re gone. The main difference between in trust for vs. payable on death is that the former has a trustee while the latter does not.

Which one you opt for can depend on your personal wishes for passing on those assets. Understanding how each one works can make it easier to choose between a POD vs. trust account when crafting an estate plan.

This guide will help you learn the pros and cons of each type of financial account and compare them.

What Is Payable on Death (POD)?

A payable on death account allows the owner to pass the assets in that account to a named beneficiary once they die. For example, you might open an online savings account and name your adult child as the beneficiary.

During your lifetime, you’d be able to use the account however you wish. You could make deposits or withdrawals, and the beneficiary would have no rights to the account. Once you pass away, the beneficiary would inherit the account from you. You can use POD designations with multiple bank accounts to name different beneficiaries.

How Payable on Death Works

Payable on death works by allowing the owner of a financial account to choose one or more beneficiaries to inherit the account. The account owner would fill out a POD form or beneficiary designation form with their bank or the financial institution that holds the account.

When the POD account owner passes away, the bank would be required to release any assets in the account to the individual or individuals named as beneficiaries. The beneficiary will typically need to present a death certificate first to prove that the account owner has passed away.

In a sense, payable on death is similar to designating a beneficiary for a 401(k) plan or Individual Retirement Account (IRA). For example, 401(k) beneficiary rules do not allow access to the account while the owner is alive. Once the owner passes away, however, the beneficiary would be entitled to receive all the funds.

Payable on Death Rules

The main rule to know about payable on death is that the beneficiary has no access to the money in the account until the account owner dies. So again, say that you name your adult child as the beneficiary to your savings account. Even though they’re listed as the beneficiary, they would not be able to go to the bank and withdraw money from the account as long as you’re still living.

Additional rules apply when there are multiple beneficiaries. All beneficiaries would be entitled to an equal share of the assets in the account. For example, assume that you have four children instead of just one. If you name all of them beneficiaries on a savings account, they’d each be entitled to 25% of the account’s assets when you pass away.

What Is In Trust For?

An in trust for, or ITF, account allows a grantor to designate a trustee who will manage financial assets on behalf of one or more named beneficiaries. The grantor is the person who owns the account; they can also be the trustee during their lifetime. The beneficiary is the person who will inherit the account assets when the grantor passes away.

After the grantor dies, the trustee can continue to manage the assets in the account on behalf of the trustee. An in trust for arrangement offers a greater degree of control than payable on death in this way: The trustee is obligated to carry out the wishes of the trust grantor.

Recommended: Putting Your House in a Trust

How In Trust For Works

An in trust for arrangement works by allowing the owner of a financial account or asset to establish a trust to hold those assets. In trust for can apply to savings accounts, checking accounts, or other bank accounts, as well as investment accounts.

The grantor sets the terms of the trust, and the trustee is responsible for ensuring those terms are carried out. For example, the grantor may specify that the beneficiary cannot receive assets from the account until they turn 30 or get married. The trustee would manage the assets in the account until either one of those events comes to pass.

In Trust For Rules

In trust for rules allow for flexibility, since the grantor can decide:

•   Who should serve as trustee

•   Who will be named as beneficiaries

•   How assets in the trust should be managed

•   When and how beneficiaries will have access to those assets.

An in trust for arrangement could allow the beneficiaries access to trust assets while the grantor is still alive, if that’s the wish of the grantor. Meanwhile, trustees are required to follow a fiduciary duty when managing trust assets. In simpler terms, they must act in the best interests of the beneficiaries.

If the trust is revocable, the grantor has the power to change its terms or revoke it while they’re living. Once they pass away, the trust becomes irrevocable and cannot be altered.

In Trust For vs. Payable on Death

When choosing between in trust for vs. payable on death, it might seem a little confusing since they both allow you to designate a beneficiary for financial accounts. Comparing them side-by-side can make it easier to see how they overlap and where they differ.

Similarities

First, consider the similarities:

•   Whether you designate a financial account as a POD vs. trust, the end goal is the same: to pass on assets in the account to one or more named beneficiaries. As the owner of the account, you have the power to decide who to name as a beneficiary to your accounts. If you’re creating an in trust for account, you can also choose who should act as trustee.

•   Whether you choose payable on death vs. in trust for, the assets in the account avoid probate. Probate is a legal process in which a deceased person’s assets are inventoried, any outstanding debts owed by their estate are paid, and remaining assets are distributed to their heirs.

Going through probate can be costly and time-consuming for heirs. Naming a beneficiary, whether it’s through an in trust for or POD arrangement, allows those assets to bypass the probate process.

Differences

Next, look at how these two kinds of accounts vary

•   The main difference between a beneficiary in trust vs. payable on death account is that one has a trustee and the other doesn’t. When you name a trustee, you’re essentially choosing someone to manage assets on behalf of your beneficiary rather than handing them over directly.

The upside is an in trust for arrangement allows you to have greater control over what happens to the assets that you’re passing on. Setting up an in trust for arrangement usually requires a little more paperwork than establishing a POD account.

Depending on the value of the assets in question, you might need an estate planning attorney’s help to set up an in trust for account.

Pros and Cons of POD

Payable on death accounts have advantages and disadvantages. Here are the main benefits to know:

•   Account owners can decide who gets their assets, without needing to include them in a will.

•   Beneficiaries can bypass the probate process.

•   Naming beneficiaries means that heirs don’t have to go looking for lost bank accounts when you pass away.

Are there some cons? It depends.

•   If you’re the account owner, you may appreciate the fact that you can leave assets to heirs and still have the use of them during your lifetime.

•   Beneficiaries, on the other hand, may be unhappy about having to wait to gain control of those assets until you pass away.

Pros and Cons of In Trust For

In trust for arrangements have similar pros and cons. On the plus side:

•   You’ll be able to pass money on to named heirs. If you’ve ever been in a situation where you’re trying to track down unclaimed money from deceased relatives, then you might appreciate an in trust for situation which would eliminate any questions about who gets what.

•   This kind of arrangement could also be helpful in situations where it’s likely that heirs may dispute the division of assets. By creating an in trust for agreement, you can decide who will get the assets, who will manage them as trustee, and when beneficiaries can receive the assets.

•   Again, both POD and in trust for accounts can be excluded from probate.

Also be aware of the potential cons:

•   Trusts can be costly to establish if you’re working with an attorney.

•   The trustee is also entitled to collect a fee for overseeing the trust, which can add to the total cost.

Recommended: What Is the Difference Between Will and Estate Planning?

The Takeaway

In trust for and payable on death are designed to make the process of passing on bank accounts and other financial accounts easier. You might consider setting up either one if you’d like to ensure that your assets go to the right people when you pass away. Your bank accounts typically have value, and you probably want to make sure that those assets you tended to during your lifetime get into the hands of the right people with a minimum of effort and expense.

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FAQ

Is In Trust For or Payable on Death better?

Whether it’s better to choose in trust for vs. payable on death can depend on the specifics of your situation. In trust for is usually better when you want to maintain a greater degree of control over the financial assets that you’re passing on. Payable on death may be preferable when you simply want to ensure that a specific beneficiary inherits a financial account.

Is ITF the same as POD?

ITF stands for in trust for, which is an arrangement in which a grantor establishes a trust to hold assets on behalf of one or more beneficiaries. POD stands for payable on death, which means that assets in a financial account are payable to one or more named beneficiaries when the account owner passes away.

What is the difference between In Trust For and a beneficiary?

In trust for means that a financial account or asset is being held in trust on behalf of one or more beneficiaries. A trustee is responsible for managing the assets for the beneficiaries, according to the terms set by the person who created the trust. A beneficiary is someone who stands to benefit financially from the death of another person, either by inheriting assets or receiving proceeds from a life insurance policy.

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The acronym “DINK” stands for “dual income, no kids,” and references a household in which two adults are working for an income (dual incomes) but do not have children (no kids), and as a result, fewer expenses. DINKs have become more common over the years as many young adults have opted not to have children, often due to the financial resources required to raise them.

What Does DINK Mean?

As noted, DINK is short for “dual income, no kids,” or “double income, no kids.” It refers to households where there are two active incomes and no children. The two incomes can either come from both partners or one partner having two incomes.

Some couples opt to wait longer before having kids, so they fall into the “DINKY” category, which stands for “dual income, no kids yet,” allowing them to save money.


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The Significance of Dual Income, No Kids

Without the added expense of children, DINK couples might have more disposable income available for spending and investing. Marketing campaigns for luxury vacations, homes, and other high-end items often target DINK couples.

However, just because a household has two incomes doesn’t automatically mean they have more money – there’s always room for improving your financial life, after all.

There are some reasons why they may still struggle financially, including:

•   Their two incomes are not very high

•   They live in an expensive area

•   They have spending habits that eat up a large portion of their income

Why Are More Couples Choosing the DINK Life?

One of the main reasons couples choose to wait or forgo having children is the financial cost, which can range well into the hundreds of thousands of dollars over the years.

Further, when the Great Recession hit in 2008, many Millennials were just graduating from college or starting their careers. That recession made it challenging to get jobs and begin investing for the future. On top of recovering from the recession, nearly half of Millenials and a third of Gen Xers have a significant amount of student loan debt.

These factors have made it difficult for young people to achieve financial milestones and start families earlier in life. However, there are some couples who choose to wait a few years before having kids after they get married for non-financial reasons. They prefer to use their time as a young couple to travel, make life plans, and enjoy an untethered lifestyle.

Types of DINKs

DINKs come in a variety of types, including new couples and empty-nesters.

New Couples

New couples can be newlyweds, or simply those living together in a single household who are not married. They may be young or older, too, and are still feeling out their relationship and planning out their next steps. Children may or may not be a part of those next steps, but for the time being, new couples are standing pat with double-incomes.

Empty Nesters

While empty nesters may be parents, they may be at the point in their lives where their children have grown up and moved out, no longer presenting a financial burden. With that, they have some significant space in their budgets unshackled, with which they can make different spending, saving, and investing decisions.

Same-sex Couples

While many same-sex couples do have children, many do not, and they might also fight into the DINK category.

Structuring a DINK Household

There are many costs associated with having children, including clothing, food, healthcare, and education. Partners who don’t have children might instead choose to splurge or save up for early retirement.

DINK couples with disposable income have many options for how to spend or invest their money. Some couples may choose to buy nice cars, while others may enjoy going out to eat. They also potentially have more free time to travel and spend money. In general, clothing, food, or travel that may have been too expensive for couples with children can be accessible for DINK couples.

A couple with no children likely won’t need as many bedrooms or as much space in terms of housing. They can either choose to save money by renting or buying a smaller place to live. They can also choose to use the extra space for other purposes, such as a home gym, art studio, or rent out a room for extra income.

Kids also take up a lot of time and have fairly rigid schedules. Some DINK couples may choose to take more time off for travel and leisure, while others might choose to work longer hours or find ways to earn supplemental income.

In addition to purchasing and leisure options, dual income couples may have the opportunity to invest their extra money. They might purchase stocks, bonds, real estate, or explore other opportunities.

They could also try and get by on a lower income, too – for some DINKs, one earning a salary of $40,000 is enough to make ends meet in certain circumstances, especially if the other partner earns more.

7 Financial Tips for DINKs

Learning about each other’s financial habits and goals is important so that couples can get on the same page, whether they’re planning to have children or not. It also helps to have productive conversations about finances.

Establishing open and honest communications before having kids may make things easier in the long run. There are some crucial areas for couples to work on if they want to live a successful DINK lifestyle or get their finances set up before having children:

1. Paying Off Debts

Before setting off on a lavish vacation, it’s wise for DINK couples to have a plan to pay off high-interest debts such as credit cards and student loans.

Without kids, home loans, and other monthly bills, couples may have more available funds to tackle their debt and. Once they’ve paid down the debt, they can use the extra money they’ve saved from monthly interest payments to invest or spend elsewhere.

2. Creating Sustainable Spending Habits

Whether a DINK couple is waiting to have kids or doesn’t ever plan on having them, practicing responsible spending habits is crucial for financial success. If a couple is always in debt, having kids probably won’t change that.

Similarly, not having kids could make it tempting to go out to eat or travel a lot. Having conversations about the type of lifestyle each person wants both now and over the long-term helps make day-to-day spending choices easier. Earning $100,000 is a good salary, but if you have bad spending habits, it may still not be enough.

3. Traveling Smart

Travel is a huge draw for many DINK couples, but it can quickly get expensive. If couples want to travel a lot, they might consider staying in less expensive places and skipping the luxury trips.

If luxury is important to a couple, they might think about only going on one big trip per year and taking advantage of points, credit cards, and other offers to maximize their ability to see the world.

4. Planning Ahead and Investing Early

The more couples can figure out what they want in life and get their finances organized, the easier it is to plan their finances. If they plan to have kids in the future, they might consider saving now for college and other child-related expenses that may come later.

Factoring in future raises, inheritances, and other additional income or expenses is also helpful. Even if couples don’t start with high incomes, the earlier they can start saving, the more their portfolio has time to grow.

5. Consolidating Stuff

Just as couples without kids may not need to live in a large home, they may not need as many things. DINK couples might choose only to have one car or bicycle. There might be other items that each person has been buying for themselves that could be shared.

6. Acquiring New Skills

Couples without kids may choose to invest some of their time and money into additional training and education. If they plan to have kids in the future, this might help them move up the career ladder or earn a larger salary when the kids do come.

7. Getting Wise About Taxes

DINK couples can make smart financial choices to minimize their taxes. Contributing to an HSA or putting pre-tax income into a 401K can help reduce the tax burden. Owning a home may also provide tax breaks to some homeowners.

The Pros and Cons of a DINK Lifestyle

There is nothing dinky about the DINK lifestyle. Not having kids, or waiting to have kids presents a huge financial opportunity for many couples. However, if they aren’t smart about their savings and spending, couples may risk running into financial trouble.

Pros of Becoming a DINK Couple

•   More free time and money to travel for work or pleasure.

•   Ease of mobility — moving or traveling to a new house, city, or country is more manageable without kids.

•   Disposable income to spend on cars, clothing, food, or other items.

•   Ability to save money by living in a smaller house and not paying for children.

•   Opportunity to save and invest extra income.

Cons to Remaining a DINK Couple

•   Potential for overspending and splurging on travel and luxuries rather than saving and investing.

•   DINK couples may be in a higher income bracket and have to pay more taxes.

•   There may be less family support for caregiving as they age.

Planning for a Life Without Children

Life without kids might be an excellent decision for many couples. The extra free time and money can be used in many meaningful ways.

However, couples need to be on the same page about whether they want kids, and there are some things to keep in mind about a childless future.

Couples will need to figure out:

•   How they’ll spend their retirement years

•   Who will visit or take care of them when they’re older

•   And who they will leave their money and assets to after they die

Saving up extra money for caregivers, retirement, and unforeseen circumstances can be an intelligent strategy for DINK couples. DINK couples must also make sure that they create an estate plan, so that their assets get distributed according to their wishes after they pass away.


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Key Financial Baselines To Keep in Mind

When doing financial planning for the future, a few things are certain. Couples will have to pay taxes, and they’ll need food, shelter, and basic necessities. Beyond that, there are some baselines couples can look to as they plan for retirement, investing, home buying, and any kids they might plan to have.

The 4% Rule

Using the 4% rule, most couples will likely need to sock away more than $1 million for retirement, in order not to outlive their savings.

Home Costs

As of the fall of 2023, the average house costs nearly $500,000 in the U.S. — something to keep in mind.

Although these numbers may sound like a lot of money, couples with two incomes and no children can start saving some of their extra cash early and take advantage of compound interest over time. If they are savvy about their savings and spending, couples can potentially retire early and enjoy more free time for travel and personal pursuits.

Planning for the Ultimate DINK Lifestyle

To recap, “DINK” stands for dual income, no kids, and refers to households with two earners and no children. These households do not have the financial responsibilities associated with children, and thus, tend to have greater purchasing power than other families or households that do have kids.

Going kid-free has many upsides, but it’s important to be money smart, plan, and work together to create a prosperous and secure future. Couples who are planning to never have children or to wait to have them, often have more disposable income to put toward their financial goals, including investing.

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FAQ

What does the term DINKs refer to?

“DINKs” refers to households with two earners and no children. It’s an acronym that stands for “double income, no kids,” or “dual income, no kids.”

What are the benefits of dual income without kids?

The primary benefit of DINK households is that they do not have the financial responsibilities associated with raising children, and as a result, have more purchasing power or discretionary income. They may be able to save and invest more, accordingly.

What percentage of married couples don’t want kids?

While it’s hard to say exactly, a rough estimate would be that around 20%, or one out of five adults say they do not plan to, or want to have children.

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