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Update on POD Accounts and FDIC Coverage


I'm still receiving reports from readers that banks like WaMu and National City are not including in the account title POD or similar terms that is required for additional FDIC coverage. Below is an excerpt from the FDIC so you can see exactly what is required.

The owner of a POD account is insured up to $100,000 for each beneficiary if all of the following requirements are met:
  • The account title must include a commonly accepted term such as "payable-on-death," "in trust for," "as trustee for" or similar language to indicate the existence of a trust relationship. The term may be abbreviated (for example "POD," "ITF" or "ATF").
  • The beneficiaries must be identified by name in the deposit account records of the insured bank.
  • The beneficiaries must be "qualifying," meaning that the beneficiaries must be the owner's spouse, child, grandchild, parent, or sibling. Adopted and step children, grandchildren, parents, and siblings also qualify. Others including in-laws, cousins, nieces and nephews, friends, organizations (including charities) and trusts do not qualify.

A reader who has investigated this issue with National City recommends that if you have an existing account to insist on new signature cards for EACH account and have POD/ITF typed in the title area and to get a copy of each signature card. You might even insist that the employee initial the typed in area. If you get a new account, insist that the National City employee type in the account title area either POD or ITF and to get a copy of EACH signature card for each new account.

Previous to this, she had faxed her signature card to the FDIC before the account title was changed. Here is part of the reply she received from the FDIC:

It appears there was an attempt to create an informal revocable trust account, but the account does not comply with FDIC deposit insurance requirements that the title of the account indicates it is a payable on death (POD), in trust for (ITF), or as trustees for (ATF) account.

Another reader has reported receiving similar information from the FDIC:

I recently noticed that while they are listed in the signature cards, the title of the accounts do not have the required term 'POD' or similar wording.

Several visits and calls to them and they said thats the way our software works. We cannot put it in the title of the account.

I spoke to a senior rep at FDIC today and he told me they have met with officals of the bank and warned them that these accounts DO NOT qualify for FDIC insurance for the expected beneficiaries.

Here's some good advice from another reader:

You cannot trust what the WaMu employees tell you, even if it is the bank manager.

The bank MUST put the letters POD or ITF in the account title. For example: "John Doe POD"

Do not take "no" for an answer.

If they refuse, find another bank paying the rate you want who will be more than happy to type those three little letters inside your account title.

If you're depending on PODs to extend your FDIC coverage at a bank, I would recommend checking with bank and the FDIC to verify coverage for your specific case. Make sure what the bank tells you is consistent with what the FDIC tells you. More details about using PODs to extend FDIC coverage is available in this post.

POD Accounts at Credit Unions

For credit unions, it seems the NCUA is more lenient than the FDIC in terms of account title requirements. You can see in the NCUA rules that there's no mention of account title.

However, a reader found this NCUA document in which the NCUA was trying to amend their rules to follow the FDIC. Strangely, the NCUA thought this change would be beneficial. Fortunately, many credit unions opposed the change and the NCUA decided not to adopt it. Here are excerpts from the document:

NCUA proposed that the member's intent to create a revocable trust be noted in the title to the account.
NCUA received sixteen comment letters regarding the proposed rule: Six from federal credit unions (FCUs), two from state credit unions, and eight from credit union trade organizations.

The commenters expressed general support for all of the proposed amendments, except for the titling requirement in the revocable trust account provision. Fifteen commenters strongly opposed the titling requirement and expressed the same or similar concerns.
as a result of the information provided by the commenters and other interested parties, NCUA has decided not to adopt the proposed titling requirement at this time because of the difficulties commenters identified that some FCUs would have in adapting their data processing systems and account forms.

It would be nice if the FDIC would follow the NCUA and remove this account titling requirement. I don't see how this account title requirement benefits anyone. It makes it more difficult for the institutions, and more importantly, it puts at risk customers' hard earned money.

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Previous Comments
  |     |   Comment #1
WaMu Branch provides you with a paper certificate that states:

Customer Name and Capacity:

My Name
A single voluntary and Revocable Trust.

then goes into the terms,etc

Now I realize I probably should have kept a copy of the application paper work which did include the POD language for my wife..but I'm well under FDIC limits so I don't think this is a concern.
  |     |   Comment #2
I had 300,000 with Indymac and it didn't say ITF ot POD in title but did have 3 beneficiaries on the account and i got paid in full. So please stop creating a panic. As long as you have the beneficiaries listed on account you will be paid in case of default.
  |     |   Comment #3
These are all important points. I too called the FDIC for clarification on POD's. I even got AMTRUST to change their software since they did not have the capability to add POD in the account title.

Something that IS important to remember, according to the FDIC specialist:

If it is a joint account with beneficiaries, the account must be labeled with POD like this:

1)John Doe and Mary Doe, POD

2) Not John Doe POD and Mary Doe POD. Adding POD to each name inferes John will POD to Mary who will then POD to the beneficiaries.

Hope this all helps.

  |     |   Comment #4
FDIC requirements are ambiguous -- obviously POD/ITF etc. must be in title, but where does it say that the names of the beneficiaries must be in the title?

Regardless, *Wachovia* put the beneficiary names in the title of my CD without requiring me to furnish their social security numbers.
O-Qua Tangin Wann
  |     |   Comment #5
Anonymous at 8:04, no one is causing a panic, and for you to suggest this is just ignorant on your part.

Just because you got your money without the need for POD or ITF or ATF in the account title doesn't mean that the FDIC might decide to enforce this clearly written rule in the future.

The FDIC might run out of funds if a major bank fails, which would mean the US Government would have to bail out the FDIC. At this point, the FDIC might be under pressure to save as much money as possible, and they might decide to not pay money if the rules were not followed to the letter.

In my personal opinion, everyone with more than $100,000 must insist on the titling. For peace of mind alone.

If you are speeding down the highway and are seen by a cop, that cop has the discretion to ticket you or not ticket you. Just like the FDIC has the discretion to give you your money with incorrect account titling or not give you your money.

Again, there is no panic. Just education and a call for being safe instead of sorry.

~O-Qua Tangin Wann
  |     |   Comment #6
To: Mr. Tangin Wann
Re: The FDIC

I agree completely. The FDIC has rules. Like them or not, they are the rules. If your bank declines to follow the rules, move on. It's not worth the aggravation if the bank goes under.

Just my $.02.


  |     |   Comment #7
Mr. Bozo, I 100% agree with you.

It is mind-boggling to me how anyone could equate safe and prudent advice with panic. No one would even think the word "panic" until that poster erroneously mentioned the possibility of panic.

It is great that that poster shared his or her experience regarding IndyMac and the titling issue. But there was no need to imply that Banking Guy or anyone else was causing any level of panic.
  |     |   Comment #8
Point to remember is the POD beneficiary's have to be tied to the account owner by blood or marriage. You can't list your fiancee, best friend etc.
  |     |   Comment #9
We had $400K in ANB went it went down in May. We've posted up about it elsewhere on this blog. Bottom line is that we would have lost $200K if we wouldn't have got insistent about the correct titling of the POD--the FDIC people there "at the scene" the first day after the bank failed confirmed that fact to our face. Don't take NO for an answer--it's YOUR money! I mean we've actually had to come face-to-face with this issue--it's not "make believe," it's real. Get the POD in the account title!
  |     |   Comment #10
well, if it's a great rate, why not open everything BUT pod's? if married, a joint, and 2 singles. Let the bank know you COULD deposit more and to let you know when they can comply with the requirements of the FDIC.

I don't like the fact that if a pod suddenly passes on, then you are automatically not covered, no grace period to change bene. and you also have to wait longer to get money if bank fails since fdic has to verify that pod is a correct bene.

ann, glendale
  |     |   Comment #11
Let's be a little careful with what we're saying here.

If a beneficiary passes on you are not "not covered." You are still covered.

If there are other qualified beneficiaries named on the account, their insurance remains in full force. If there are no remaining qualified beneficiaries, the account is covered as if it were an individual account of the owner (and the total is combined with all of the owner's other individual accounts.)

Of course this could leave assets exposed if the total in the account is more than the coverage given to the remaining beneficiaries or if the account owner's total individual accounts are more than $100k.

I'm sure this is what you meant to say. But I wouldn't want a casual reader who maybe has one account at a bank with a beneficiary to think that the account suddenly enters some special uninsured category just because the beneficiary has died.
  |     |   Comment #12
I came into my local Wamu brach to add beneficiaries after opening the CD online. The printout they gave clearly stated both beneficiary and POD status.
  |     |   Comment #13
Well, hi guys....I have (again) spent much of the day communicating with NCC regarding the matter of "POD's being stated explicitly in the ACCT TITLE"...NCC's legal dept is still trying to maintain that the fact that the POD is on the signature card is adquate (which it isn't). However, I have beenworking with a very good CSR in a supervisory position who has now promised that he will supply a "manual override", showing the POD in the ACCT title. This rep has been very responsive in the past..hopefully he will be the same way now.
  |     |   Comment #14
If the account title does not say "POD" or similar, the customer has no proof that the bank has met the FDIC *OR* the POD requirements for your account. Verbal assurances from a bank rep will be legally useless when the time comes to Pay On Death or when recovering over $100k during a bank failure.
  |     |   Comment #15
For banks that are reluctant to comply with the requirements, I have had some success having them insert "POD [Beneficiary Name]" on the Address #2 line of the account record. I think this would satisfy the FDIC requirement.
  |     |   Comment #16
It's true that POD is not put on the title of the CD receipt we get from National City but it is in their records and on the Signature card. I ALWAYS make sure I get a copy of the signature card to attach to any POD CD. I called the FDIC and was told this would be acceptable in case of bank failure.

However, I was also warned to make sure one does not go over the 100K for the owner of a POD because ONLY the owner is insured, not the beneficiaries. They also said if I put the same beneficiary on a joint account with my name on it also the account becomes a POD account and I would not be insured for this account. So it seems we must be astute when putting money into other titled accounts in same bank if we want it insured. The regulations for FDIC can be very confusing and I have been given different answers by different agents. Kind of like calling the IRS!
  |     |   Comment #17
I have talked to three FDIC employees and one supervisor about POD account requirements when trying to help a friend with accounts at IndyMac. The FDIC will only use bank records as their primary source of determining what is covered and not.

My friend’s records don’t have POD or IFT on the titles, but according to the FDIC, a bank can use their own way to identify the account types in writing as long as they should POD in their systems. When I say bank records, I mean what they have in their computers and how they treat your accounts, not what is on paper.

The impression I got from the FDIC is that they usually have no reason to go to paper records.
  |     |   Comment #18
I just got off the phone with an FDIC representative about how WaMu paperwork was set up; and she said it is acceptable because it does outline that it's a POD account eventhough it doesn't say the word POD or ITF right after your name. hope this assures some nay sayers.
  |     |   Comment #19
RE: NCC. After many requests, a supervisor CSR at NCC has sent me a Change of Title/Signature card that shows my POD in the acct title. The CSR said that this info would then be "SENT TO NCC'S DATA ENTRY where it will be on file".
  |     |   Comment #20
We had 10,000 over $100,000 at IndyMacBank in a formal living trust done by a lawyer. Even though there were three beneficiaries and every person who ever looked at it said it would be insured for 3 x $100,000. the FDIC didn't like the wording and will only cover the $100,000 plus half of the uninsured amount or $5,000.
If you amend/clarify the original trust agreement prior to the date of a bank's closing I believe the FDIC will honor that amendment.
  |     |   Comment #21
Interesting comments. Bottom line: get paper copies of everything, including POD cards completed at the bank. Trust nothing verbally if it's not in writing. Read the fine print on everything. Question: if I put $100,000 in a 5% CD, solely in my name, no POD listed, etc., and the bank fails about the time my CD matures, does FDIC insurance pay me $100,000 + the $5,000 interest also?
  |     |   Comment #22
I had opened 4CD's 90K each (approx) deposit with a credit union in April 2008 in the following names.
1) Self & Spouse (Joint cd) beneficiary my Son
2) Self & Spouse (Joint cd) beneficiary my daughter
3) Self (Individual) beneficiary Spouse
4) Spouse (Individual) beneficiary myself.

The credit union had issues me CD for #1 , #2 in my name alone; as well as #3 is in my name alone. Even though the account opening request was in Joint name for #1 & #2 . The Cd does not have my spouse name nor it does have the benficiary name on the account.

Based on all of post & info hear I contacted the CU this week.

Asking why do they print one name on title of Cd when it is Joint,
if they could print it correctly or do a correction by hand and initial it. CU said NO.

I have been told their software does not allow it multiple names even for joint account.They just print the first name on the CD.
Can CU be say so ( need help here #1)

The member services sent me a copy of my signature cards where it is referring that i had applied for joint account with beneficiary.

They also sent me on their letter head of CU stating the account # which are joint & listed the beneficiary for them as well as the individual account with myself or spouse as beneficiary.

Please let me know if I should break the Cd #1 & #2 and secure my funds if some thing happens to the CU, since NCUA can consider all 3 cd in my name well over $100K and not over it all

Will appreciate a reply post.

  |     |   Comment #23
reply to the last post on 9/5.

If you have the 90K each on the jt cd, you are covered up to 200K because of your son, 200K because of your daughter. As long as the account card shows that you have joint ownership, you are covered. It looks like your credit union has record to show that you have joint ownership, as long as you have the beneficiaries properly listed, you are fine.

And the answer is no to break that CD.
  |     |   Comment #24
I opened a checking account with
wamu and had no problem with opening
the account with P.O.D.. I opened
a CD with National city and there was
a problem with my beneficiaries not
showing up. I called and it was taken care of. I was not pleased with their customer service.
  |     |   Comment #25
So has anyone opened several WaMu online CDs as POD accounts in the online applications?

And they will fax you the signature card on request?

WaMu stock is down over 20% in early trading today
  |     |   Comment #26
I have CDs scattered at numerous banks and Credit Unions, and it seems that they seldom can list POD names in the account title. Joint names don't seem to be a problem. When they tell me it's ok, I usually ask for something that I can file to show that they have an internal record, because I know that it's ultimately up to me to prove this. If the FDIC requires that POD names be listed in the account title, then am I doing enough? Should these bank practices be brought to the attention of the FDIC?
  |     |   Comment #27
In my conversation with the FDIC, the FDIC agreed that WaMu's POD account documentation supports the conclusion that individual and joint POD accounts are adequately documented for the purpose of qualifying for separate deposit insurance.

WaMu also stated they have researched this and have found no discrepency. I fully trust them and hope people don't panic due to being educated with the incorrect information.
  |     |   Comment #28
Please error on the side of being over cautious on this issue.

I have had problems with both NCC and WAMU on the getting the POD into the TITLE field. Be careful. I do NOT think it is enough to get it on the CD receipt or certificate. FDIC says TITLE. That's the Title field on the signature card.

I am upset with BOTH FDIC and the Office of Thrift Supervision. I have contacted them on this, and FDIC just says they make the rules. They do not supervise or enforce the rules (of course, unless the bank fails, then they enforce the rules ON YOU).

OTS wrote me back and said they would have WAMU contact me. That's no help. I'm trying to get the Federal GOV to tell me if the FDIC Bank (any) is also in compliance so that I am protected. I cannot seem to get them to step up and examine this POD issue.

I did get NCC to acknowledge the issue, and they claim their software will be fixed by November to include POD in the Title field.

Some banks are telling me that they do not have the ability to put POD in the title because their state does not recognize POD. All of this tells me that the FDIC and OTS do not audit bank procedures to protect the public on this issue.

THANK YOU - BANK DEALS - for bringing this issue to a focus for us!
  |     |   Comment #29
Capitol one labeled mine jim or mary BNF

I had my two children as pod`s
  |     |   Comment #30
I insisted my bank put pods in the title, so they did sort of not "POD" but "PODS" , go figure I insisted they put in pod`s so they titled my account " John R. Smith PODS"
I hope if they fail this will suffice as i have 250K in this bank with 3 beneficiaries.
  |     |   Comment #31
GMAC bank just sent me a msg saying they can't mail a copy of the signature card to me for privacy reasons. IS THIS COMMON?
They mailed me copy of the new forms and asked me sign it and mail them back. Will that be alright for me to sign, make a copy and mail them back?
  |     |   Comment #32
  |     |   Comment #33
Q: to any one with knowledge... A p.o.d is in my name thru family,, but they have responsibilities with 2 homes... does their  estate precede the   p.o.d   if they owe money in property ?? how does all that work... appreciate any help from knowledgeable source ~~~

Helen Landers
  |     |   Comment #34
My customer has three stepchildren titled as PODs on his accounts.  Are stepchildren eligible by FDIC to receive their inheritances, or must they be the owner's natural children by birth? Language in the FDIC is confusing.  Also, are these children covered up to $100,000 or $250,000 each?
  |     |   Comment #35
Why not girl/boy friend...why should it matter?  US Citizen and over 21

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