Deposit Insurance

Jointly-owned Accounts

1. Any type of joint ownership (JTWROS, Tenants in Common, Tenancy by the Entirety); 2. Depositor's proportionate share of each joint account added together. Aggregate joint ownership interest in all accounts added together and insured up to $250,000, in addition to individually- owned accounts

Basic FDIC Insurance Concept

1. Coverage provided regardless of citizenship or residency status 2. Coverage provided on all savings, checking, time deposits, cashier's checks, loan proceeds checks, expense checks, certified checks and letters of credit (for which the institution is primarily liable, such as commercial letters of credit). 3. Deposit does not include standby letter of credit supported only by a contingent promissory note. 4. Generally, if accounts at a single institution total $250,000 or less, the deposits are fully insured; 5. If more than $250,000, FDIC permits additional insurance coverage based on variations of legal ownership; 6. If depositor dies, death does not affect insurance coverage for a period of six months from the death of the depositor unless the deposit is restructured during that time (depositor treated as still alive during that six month period for FDIC insurance purposes)

Payable on Death/Testamentary Account/Revocable Trust

1. General rule: as of September 26, 2008, beneficiary coverage provided as long as beneficiary is natural person, charity or non-profit entity. Payment is calculated based upon the beneficiary, but paid to owner. 2. Beneficiary must be a natural person, charity or non-profit entity (no pets, for profit entities, deceased persons) 3. General coverage amount will be $250,000 per beneficiary. However, rules are slightly different for situations where there are more than five beneficiaries and more than $1,250,000 on deposit with the bank

Individually-owned Accounts

1. Individually-owned, non-retirement accounts are added together and insured up to $250,000. Sole proprietorship and Health Savings Account with no payable on death designation are included. Insurance coverage is in addition to other types of coverage for which the depositor is eligible. 2. If a depositor fails to qualify for another type of coverage, deposit amount typically "reverts" to individual coverage. But if depositor exceeds coverage limit, amount in excess is uninsured

Joint Account with Minor

FDIC advisory opinion (July 11, 2008) makes it clear that if minor does not actually sign the signature card, the account will not receive joint coverage. Instead, the account will be included with the individual coverage of legal owner (this is "reversion").

Sole Proprietorship

a. Added to individually-owned accounts b. Aggregate insured up to $250,000 c. Use of EIN does not impact rule

Corporate/Partnership Accounts

a. All accounts owned by entity engaged in "independent activity" are aggregated and insured up to $250,000; b. "Independent activity" means that entity was formed for purposes other than to increase insurance coverage

Requirements for Joint Insurance Coverage

a. All co-owners are natural persons b. Each owner must sign the signature card (if used by bank), unless account is a CD or negotiable instrument, or account is set up by an agent, guardian, conservator, custodian or broker on behalf of two or more persons (very limited application); c. Each of the co-owners must have the same right of withdrawal

Payable on Death (With Equal Beneficiary Interests)

a. As of September 26, 2008, owner of account receives up to $250,000 coverage for each beneficiary under a POD. Applies to each owner of a joint account b. Owner and beneficiary can "swap" places and receive the same POD coverage. Example: John POD to Mary (spouse)/ Mary POD to John (spouse); c. Coverage is separate from individual and joint coverage of parties d. Two requirements: i. "Payable on Death" or "POD" must show in title of account (including signature card, certificate of deposit or time deposit receipt) and it should show on bank records (written or electronic). Name of beneficiary does NOT have to be listed in account title. ii. Beneficiaries must be named somewhere in the bank's documentation signed by the customer (either separate POD contract or signature card). Class of beneficiaries is not acceptable (no "POD to all of my children"). e. If a POD account is not fully insured: i. Uninsured amounts do NOT revert to the owner's individual coverage. ii. Reversion only occurs when the beneficiaries themselves do not qualify for the coverage.

Irrevocable Trusts

a. Do not confuse with "Revocable Trusts" b. Insured under each beneficiary (regardless of relationship to grantor) if: i. Deposit records show trust ownership ii. Beneficiaries can be identified either from institution's deposit account records or from trustee's records (no reason for institution to keep a copy of the trust agreement) iii. Beneficiary has to have a "non-contingent" interest as defined by the FDIC (be warned: many irrevocable trusts contain "contingencies" that will affect insurance coverage); and, iv. Trust must be valid under state law. c. If grantor retains an interest in the trust, no separate coverage. d. Trust can be submitted to FDIC for formal opinion

Public Funds (State and Municipal Government Accounts)

a. In-State: i. Up to $250,000 for the combined amount of all time and savings accounts (including NOW accounts) and ii. Up to $250,000 for all demand deposit accounts (interest-bearing and non-interest bearing). b. Out-of-State: i. Up to $250,000 for the combined total of all deposit accounts

Fiduciary Accounts

a. Includes: i. Trustee ii. Agent iii. Nominee iv. Custodian v. Guardian/Conservator b. Account insured under name of principal (actual owner) as long as: i. Fiduciary nature of the account is disclosed in the account title; ii. Identities and interests of principals are ascertainable from deposit account records or depositor's records; iii. Special rules for multiple tiers of agency relationships.

Relationships not insured by the FDIC:

a. Mutual funds, stocks and annuities b. Treasury securities c. Safe deposit boxes d. Robberies/Thefts i. FDIC kicks in when banks fails, robberies generally don't cause failures e. Bank stock f. Property i. FDIC insurance does not cover damage to property; if you have property in safe deposit box, better have other insurance

Testamentary Accounts (a/k/a Totten Trusts or "In trust for" Accounts)

a. Not really trusts; b. Really POD; c. Use same POD rules for insurance purposes

Employee Benefit Plans

a. Pass-through insurance coverage; b. Generally, each plan participant is insured up to $250,000; c. VERY COMPLEX AREA- plan administrator should determine insurance coverage. Detailed info can be found on FDIC's insurance website

IRAs/KEOGHS/457 Plan Accounts

a. Self-directed retirement funds owned by the same person in the same insured institution are added together and the total is insured up to $250,000. Includes all traditional and Roth IRAs. b. WARNING: Beneficiary designation is disregarded. c. Separate from individual ownership but doesn't matter who beneficiary is, not like POD

FDIC Insurance

i. Permanently raised to $250,000 by DFA ii. Increasing limits encouraged depositors to place money in banks, rather than alternative investments (which were not insured by the government)