FDIC COVERAGE

Matt83 | Jan 28, 2023 | 43 posts since 2018

I have a sizable amount of money at one large online bank and I have a question about maximizing FDIC coverage.

I obviously have one account covered to the max 250k and it is in my name.

My question is I understand that I can get an additional 250k per account by having different beneficiaries listed with POD.

I have a minor child. Can I list her as beneficiary and get an additional $250k? She's 11 by the way. And if so, in the event of my death since they are under the age of 18 does her adult guardian then have full access to the account?

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Answers

NFO | Jan 28, 2023 | 59 posts since 2022

I'd advise you to go to the source rather than rely on random people's opinions...no offense intended to anyone else to answers.

https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation

https://www.fdic.gov/resources/deposit-insurance/understanding-deposit-insurance/

https://edie.fdic.gov/calculator.html?

Ltssharon | Jan 30, 2023 | 230 posts since 2020

I use the edie website above.

RichardW | Jan 28, 2023 | 284 posts since 2019

For a bank account with 5 or fewer beneficiaries, the owner’s deposits are FDIC insured up to $250,000 for each unique beneficiary. In the case of a bank account with one owner and 5 unique beneficiaries it could be insured up to $1,250,000. The beneficiary must be a living person, a charity, or a non-profit organization. This topic is explained starting on page 12 (labeled as page 10) in the following 31 page FDIC pdf:
https://www.fdic.gov/resources/deposit-insurance/brochures/documents/your-insured-deposits-english.p...
You can evaluate various POD bank account scenarios including multiple beneficiaries utilizing this FDIC calculator suggested earlier by reader NFO: https://edie.fdic.gov/calculator.htmlYou can verify that your bank is FDIC insured at this website: https://banks.data.fdic.gov/bankfind-suite/bankfind

CDCA | Jan 30, 2023 | 10 posts since 2023

When a revocable trust owner names six or more unique beneficiaries, and all the beneficiaries have an equal interest in the trust (i.e., every beneficiary receives exactly the same amount), the insurance calculation is the same as for revocable trusts that name five or fewer beneficiaries. The trust owner receives insurance coverage up to $250,000 for each unique beneficiary. As shown below, with one owner and six beneficiaries, with equal beneficial interests, the owner's maximum insurance coverage is up to $1,500,000. If you decide to use unequal share for 6 or more beneficiaries then the totle coverage is capped at $1.25m.

me1004 | Jan 30, 2023 | 1,143 posts since 2010

What RichardW posted is correct, but I find the language the FDIC uses to say it a bit stilted. You are not getting extra insurance for the first beneficiary, that beneficiary and the owner together get only $250,000 coverage. And yes, that means five beneficiares will get a total coverage of $1.25 millon coverage.

In this question, OP is talking of one beneficiary. That means FDIC coverage would bea total $250,000, nothing extra because of that one beneficiary. OP is wondering how to get more than $250,000 coverage when he has only himself and his daughter to work with.

And I note, the coverage is for all accounts registered the same at a financial institution, not
$250,000 on each one.

RichardW | Jan 30, 2023 | 284 posts since 2019

One way that Matt83 might be able to obtain $1,250,000 of FDIC coverage in one account and still have the ability to essentially leave it to just one beneficiary, his daughter, would be to utilize 5 unequal beneficiary allocations. Ken Tumin describes this technique in one of his older DA blogs: “First, instead of equally dividing the money between beneficiaries, you can choose a custom allocation. For example, you can leave 99.6% to one beneficiary and 0.1% to each of four beneficiaries. Those other four beneficiaries could be friends or charities.” (see: https://www.depositaccounts.com/blog/2011/05/maximizing-your-fdic-coverage-with-beneficiaries.html )

CDCA | Jan 30, 2023 | 10 posts since 2023

Yes that works as I have done it but many banks do not allow unequal percentages.

Ltssharon | Jan 30, 2023 | 230 posts since 2020

Well, my goodness, who would have thought of this? my goodness gracious,

Matt83 | Feb 1, 2023 | 43 posts since 2018

Thanks Richard. That looks like it would work. I bank at Ally too. The article says Ally is perfect for this.

I also was curious about one other thing. Let's say that you have 3 beneficiaries so you have $750,000 in coverage. If the bank would fail when the money is being returned to the owner does the owner still retain the $750,000 or would $250,000 be returned to each one of the three protected separate individuals?

RichardW | Feb 1, 2023 | 284 posts since 2019

Matt83…if you establish a Payable on Death (POD) bank account, then as stated in this Investopedia.com article https://www.investopedia.com/terms/p/payableondeath.asp : “The named beneficiary is not entitled to any of the money in the account while the account holder is still alive. Upon death, the beneficiary automatically becomes the owner of the account, bypassing the account holder’s estate and skipping probate completely.” The same article contains several other points which may be of specific interest to you, including the following: “As a general rule, a POD account can have more than one beneficiary. However, if the account owner wants each beneficiary to receive unequal portions of the assets in the account, they must check that their state laws allow it, given that some states only permit an equal distribution of funds in a POD account.”

IGR | Feb 1, 2023 | 203 posts since 2020

Thank you @RichardW. FINALLY!!!
This goes way, way, Dangerously way Off Track here.
People can misinterpret or get a wrong impression to the severe consequences to some Estates and Beneficiaries!!!
Please, do not confuse the issues of 1."Payable on Death" as FDIC Deposit Insurance, the event of the "Death" of Financial Institution, governed by Congress/FED/CFPB/FTC and administered by FDIC/NCUA and 2. Payable on Death as an Inherited Estate Distribution, the event of the Death of the Depositor, governed by Court/Law/Judge and executed by Financial Institution.
Where is the confusion with the issue#1 - call the Bank/CU and hope that you talk to knowledgeable Individual or call to FDIC if any doubts persist.

Where is the confusion with the issue#2 - follow small print hidden at the bottom "check....state laws" and call to your State Admitted Estate Attorney. The issue#2 is rarely DIY
"Upon death, the beneficiary automatically becomes the owner of the account, bypassing the account holder’s estate and skipping probate completely." - I am not qualified to explain how ridiculously incoherent and contradicting this statement is!
Except Death itself, virtually nothing is "automatically";
Nothing entitles Beneficiary to become "the owner of the Account", beneficiary only inherits Funds.
Nothing entitles Beneficiary to "bypass the account holder’s Estate and skip the Probate", once the issue is contested in Probate Court everything is out of hands of FI and Beneficiary.
State Law has a final say on how the Estate is distributed. Some States may have the categories of the Beneficiaries whose rights to Estate supersede those named as POD of the Account
"Upon death" of the Depositor Bank/CU "automatically" becomes legal Guardian of Funds and de-facto Executive of the Estate under its guardianship.
Only one scenario is "automatically" - when the account is Joint "upon death" of the Depositor, surviving named will become the sole owner of funds. There is a period of 6 months to make the changes of the Account, during which FDIC will not change the amount of coverage.
Where the Account is Single Owner with POD/ITF Informal Trust "upon death" of sole owner Bank/CU will "automatically" consult with its Legal Department.
From there it depends on the Institution(online or brick), the amount and the relationship with local Banker.
There is a 51% chance that funds gets to be frozen for some time. Where the Account used to be Single Owner with multiple Beneficiaries it is 90%.
Where the Account used to be Single Owner with multiple Beneficiaries and unequal distribution I'd give it is 101% chance that the Funds will remain frozen until Probate Judge issues the order.
Do not Die, people!
But, if you planning to Die and want to distribute your estate unequally, consult with your Attorney while alive and better have multiple Accounts with different Amounts and single Beneficiaries.
However, despite some claims here, FDIC would Not care how the inheritance is allocated to the beneficiaries.

FDIC calculates Total Amount of Coverage per Owner/Institution based on Total Amount on Deposits per Institution and number of owner/beneficiary combinations.

It is certainly possible to setup multiple Joint Accounts with Single Co-owners and variable Amounts if you figure out how to safeguard your funds across multiple Accounts against multiple Co-owners in times of online/mobile/fintech/atm banking.

Thank you @Ltssharon!

Important Update!
Effective April 1, 2024 my example of FDIC game being plaid with Soccer team(11 field players) is no longer viable!
New Limit is a Basketball Team(6 field players)
"New rules effectively limit coverage for a grantor’s deposits at each institution to $1,250,000 for a single grantor trust and $2,500,000 for a joint trust, assuming that there are five beneficiaries of such trusts."

lou | Feb 1, 2023 | 1,028 posts since 2010

"where the account used to be single owner with multiple beneficiaries and unequal distribution, I'd give it a 101% chance the funds will remain frozen until probate judge issues the order"

Give me a credible source for the above statement. In my state, what you just said is 100% wrong.

me1004 | Feb 2, 2023 | 1,143 posts since 2010

IGR, yes, I agree about the language used to explain these issues. :) One thing to understand, though, is that a POD or ITF account is a type of trust. The beneficiary technically becomes trustee of the trust even as the trust says they are the beneficiary too, and as such can take the cash.

I'm not a lawyer, I'm not going to say that no state can apply probate to the POD trust. But be careful about the unnecessarily stilted language the FDIC uses to explain anything. Still, I have always been told by everyone that as a trust, it avoids probate just like any other trust. And I expect a federal FDIC insured account would come under federal law rather than state, and could overrule any state probate laws that might try to interfer with the POD trust -- but again, I'm not a lawyer, and I have not checked the laws in all 50 states.

As for the beneficiary simply taking over "ownership" of the account, as I said, they would actually be trustee of the POD trust. I am not even going to try to explain the many details of being a trustee, and the specific details pertaining to a POD trust might even require the trust be dissolved. But I do know at least in some states if not all, you do not have to liqudate it immediately. I did not, because the bank CSR warned that if I closed it before interest was posted, I would get no interest, and they posted interest only once every quarter. So, I left it in the account until the interest posted, because I did not have to close it immediately. I don't know if you could leave it in the POD trust for the long term. But the bank doesn't even know the orignal owner died until you tell them and produce a death certificate.

I never wanted to leave the money in the bank, but I am sure that the bank must have the option to not allow that for the long term. I did it only for short term.

IGR | Feb 3, 2023 | 203 posts since 2020

I'm not a lawyer either, neither I am "an expert on this subject" however.
FDIC coverage and Trust Execution hardly ever intersects.
I can't imagine the situation where both issues come together simultaneously.
We have to ask 100% "reader Lou" how it happens in "his state".
Federal Law does not regulate the property rights of its subjects, with the exception of guns, weed, booze, etc..., while it can tax property possession and transfer.
On the state level the deposit "ownership" is not regulated with the exception of some aspects of locally chartered community Banks and CUs.
You need to clarify to yourself what do you mean as "probate". I never used this narrow legal term in connection with Trust. In general, any property where the Trust is a Beneficiary is not a subject to probate proceeding. On practice "probate" could mean that FI may feel safe to freeze funds until Court Order or the end of Probate period. Except of 100% of "reader Lou" state.
"ownership" is a key word, imagine Branch manager of online CSR who has to execute the Informal Trust and deal with multiple Beneficiaries - "owners", Beneficiaries of the Deposits but not the owners of the Account!
What do you think happens if online or over the phone CSR receives the request from the beneficiary CSR can not Identify, since the Beneficiaries are not FI customers and not profiles exist for them.
How 100% of "reader Lou" would access Funds? Using diseased owner profile? I wish so, because it is illegal on Federal and State level and there is "101%" possibility that "reader Lou" becomes inmate Lou! to protect itself from Lou, at al. FI should freeze the account, at least FIs I'd like to be banking with!!!
Better yet, is when "reader Lou" walks into the Branch, requests the withdrawal, learns that he is only entitled to $100 out of $100K on the Deposit, because IGR is 99% Beneficiary
There is 99.99999% chance that "reader Lou" goes ballistic, makes the claim that his 1% entitlement is invalid and the mistake was made by the Bank or the Owner was not in clear mind when allocated 99% to IGR and threatens with legal actions against the Bank and Branch's Employees.
The FIs I'd like to be banking with should freeze the Account to protect my Beneficiary interest against "reader Lou".
I have no advice, but I would never combine FDIC and Inheritance issues.
For the FDIC I would have named Beneficiary's, and
for the inheritance I would have a Will or Formal Trust or something else which could not be advised within Deposiaccounts.com.
My only advice is to speak with professionals outside of this forum!,
as an alternative to following "reader Lou" because he is given tip to Ken.

lou | Feb 3, 2023 | 1,028 posts since 2010

Are you kidding me? You just hypothesized a situation where the beneficiaries legally dispute their respective percentages of the POD. Guess what? That could happen if there was only one beneficiary. Another family member could contest it and now it would have to be settled in a legal context. You pick the worst case scenario and then advise DA readers to never do something which could happen in any context if you have greedy family members who are intent on causing trouble.

BTW, can you write more succinctly. It's torture reading your tedious, incomprehensible, grammatically/syntax butchered and very long posts. Do you talk this way?

Choice | Feb 3, 2023 | 937 posts since 2020

Just like an English lit class…get use to it..or don’t read it! Your attorney may help!

IGR | Feb 3, 2023 | 203 posts since 2020

Well, let me try to follow your orders! "talk this was", "give me that"
I should be exercising Freudian, but the hand gets numb.
Instead, I'll practice Darwinian.
There is an animal, can hardly fly but call itself a bird...
Beautiful tail, crowned head, royal walk.. still can hardly fly.
Squawk like a baby, called Peacock.
Pea, because of the size of the brain.
C0ck, because essentially it is a glorified chicken.
You can have it, because there is not much else.
I keep "reader Lou" in my tedious, incomprehensible, grammatically/syntax butchered vocabulary.
How do you like them kidding?

Ltssharon | Feb 3, 2023 | 230 posts since 2020

Also, change happens.
Remember when the FDIC coverage used to be 500K and suddenly it went to 250 k. What a pain that was. And look again, at what I found on the fdic website. Things change at the will of somebody, not me:
Important Update!
Revocable and Irrevocable Trust Rule Change Effective April 1, 2024
The calculations provided by EDIE are current through March 31, 2024. The rules for revocable trust accounts (including formal trusts, ITF/POD), irrevocable trust accounts and mortgage servicing accounts will change on April 1, 2024. You can learn more about all the new changes by visiting www.fdic.gov/resources/deposit-insurance/. good gravy, we are at the government mercy for sure/

lou | Feb 3, 2023 | 1,028 posts since 2010

It went from $100K to $250K.

lou | Feb 1, 2023 | 1,028 posts since 2010

Go back to Ken's initial post about unequal coverages and look at who he cites for giving him the tip.

Ltssharon | Jan 31, 2023 | 230 posts since 2020

FDIC rule change coming March31 (or was it April1 ), anyway, 2024. This is from the FDIC edie page:

Important Update!
Revocable and Irrevocable Trust Rule Change Effective April 1, 2024
The calculations provided by EDIE are current through March 31, 2024. The rules for revocable trust accounts (including formal trusts, ITF/POD), irrevocable trust accounts and mortgage servicing accounts will change on April 1, 2024. You can learn more about all the new changes by visiting www.fdic.gov/resources/deposit-insurance/. good gravy, we are at the government mercy for sure.

Moonshot12 | Jan 31, 2023 | 1 posts since 2023

Does anyone know of a way to get additional NCUA coverage above 250k for an IRA CD at a single credit union?

MY2CENTSWORTH | Jan 31, 2023 | 209 posts since 2016

Moonshot, I think that you will find that it is not possible to have FICA or NCUA coverage above $250K with an IRA at any one FI.

IGR | Jan 31, 2023 | 203 posts since 2020

That does seem to be the case, with few archaic FDIC and NCUA exceptions. IRA in many technical aspects is not exactly Deposit Account, even when funds Deposited and held in similar fashion.
It is a good problem to solve! please let me know.
My ignorant bet is that one would have to work with Financial Advisor/Attorney to create some kind of Trust arrangement and still I wouldn't be surprised if the solution is to split the estate into multiple IRA accounts under $250K limit

me1004 | Jan 28, 2023 | 1,143 posts since 2010

It takes two beneficiares to get the extra $250,000 coverage -- the first one gets you only what you have without a beneficiary (that is, the first one counts same as you).

If you want it to go to that child and get the extra $250,000 coverage, an alternate way would be to add the child as a joint owner of the account. But that means they have freedom to access and withdraw the money at will, as they please, and you might not want that. You could still report the entirety of the account under your Social Security number for taxes. That would be claiming all in it as belonging to you. If the child were to have money of her own in the account, you are supposed to report the amount of interest income on it for her money on a 1099 to her and the government, and she would pay the tax on her part of the interest.

I don't know about the part of your question related to the guardian. That might be dependant on what the guardian paperwork says (or, are you talking of the mother). I doubt the guardian automatically has access, after all, you might not even have wanted that. After all, if your child had an account of their own as single owner, would you be able to access it at will and take money out?

bobert456 | Feb 1, 2023 | 33 posts since 2022

Thank you, me1004. I read your post and thought you were wrong.
It has been me - wrong for all these years. I always read the first POD as +250K, but I now see you are exactly correct. Single Account, no pod =250k, single account, plus 1 pod = same 250K (not additional). I have been wrong all this time. THANK YOU.

IGR | Feb 1, 2023 | 203 posts since 2020

That is tricky one, difficult to explain.
There is an important practical aspect, some maybe confused about.
Account 1: CD - POD=$250K of coverage limit.
Account 2: Checking/Saving/Share/MM/CD - Single = $0 of coverage limit.
OR
Account 2:Checking/Saving/Share/MM/CD - Single/POD = $0 of coverage limit
where the same Depositor and Beneficiary are named on the Record with Insured Institution-
Total limit of coverage -$250K across all accounts.
Helps to understand how it works in multiple accounts settings at CUs under NCUA Coverage

bobert456 | Feb 1, 2023 | 33 posts since 2022

wait .... I think it is still +250K if "second account"..... first account=owner 250K, second account at same bank of owner pod/one = second 250K .... so its "250K per unique styled account",. Single owner =250K, second account single owner/pod also is another 250K even if same owner name

If only one account at the bank, then yes, owner+pod is still "one style account" (two named people, but only one styled account=250K

I think I just verified that on EDDIE ... am I missing something??

lou | Feb 1, 2023 | 1,028 posts since 2010

No, you're not missing anything. IGR is wrong about account # 2. He writes very long posts. Unfortunately, he isn't always accurate. Caveat Emptor.

bobert456 | Feb 2, 2023 | 33 posts since 2022

-thank you, LOU

IGR | Feb 2, 2023 | 203 posts since 2020

It is inaccurate indeed.
Several issues were mixed up; coverage limit, endorsement types, interest allocation and POD amounts.
Let me restate;
Account 1: CD - POD/ITF"250", $250K balance=$250K Coverage
Account 2: Checking/Saving/Share/MM/CD - Owner/Single, $250K balance=$250K Coverage.
Total Covered = $500K
POD Amount = $250K

Account 1: CD - POD/ITF"250", $250K balance=$250K Coverage
Account 2:Checking/Saving/Share/MM/CD - POD/ITF"250", $250K balance=$0 Coverage
Total covered = $250K
POD Amount = $250K
where the Same Owner and Beneficiary are named on the Record with Insured Institution

Account 1: CD - POD/ITF"499", $499.9K balance=$250K Coverage
Account 2:Checking/Saving/Share/MM/CD - POD/ITF"100", $100 balance=$250K Coverage
Total Covered = $500K
where the same Owner and Different Beneficiaries are named on the Record with Insured Institution
POD Amount = $500K
where
The Beneficiary "499" POD amount is $499,900.00
The Beneficiary "100" POD amount is $100.00

There is no need setting the Account with multiple Beneficiaries and unequal Distribution.
There is no need to rely on DA as a source of the knowledge and taking a chance that claims of some DA readers for 100% "In my state" has equally absolute meaning for Beneficiaries for other readers deceased in different state.
In my State, as named Beneficiary, I had to deal with locked Account, not because of the remaining funds there, but because of the aggravation of being reminded about the deceased relative every month Bank would send to me a statement. In neighboring state I witnessed Beneficiaries raced to empty deceased account.

Death is a complicated matter; physically, emotionally and financially.
If it is different in your state, you are lucky to be dead there.

Which brings me to very important issue, no matter how long my writing is.
Ken must ensure that every page of this site prominently displays the disclosure that nothing, in any shape or form, published on DA constitutes Financial or Legal advice.
I am 100% sure that if some reader suffers the injury by following information published on DA, it will not be some anonymous DA poster but Ken's business having to defend from liability claim.

lou | Feb 2, 2023 | 1,028 posts since 2010

Yes, there is sometimes the need to set up the account with multiple beneficiaries with unequal distributions if the credit union or bank allows it. Because if you need to insure way more than $500,000 and the credit union won't let you have different beneficiaries for each CD or account but will allow unequal distributions, then that is the only practical way to insure very high amounts. I can only comment about my state, but where I live this absolutely allows you to direct the money to the preferred beneficiaries, avoid probate and get the NCUA/FDIC coverage you need.

You need to be careful about dispensing advice when you are obviously not an expert on this subject. Don't pretend to be one if you're not.

bobert456 | Feb 2, 2023 | 33 posts since 2022

IGR - I'm sure you your answers are in earnest, and you have some direct experience here, but we are still dancing around the same words with different conclusions. I have run EDDIE, and it supports that one individual account is 250k (Categorie one), then open a second account with a single POD (categorie three), and it ADDS another 250K, SO ..... 500k of assets get coverage. (two separate accounts with same owner).

NOW, here's the rub. That's EDDIE ..... I have a few credit unions who state that "they" consider all the other accounts under the membership as "sub-accounts" and all get rolled up into the same member (exception for single, then joint, but ALL other accounts with POD they consider as subs). Only way around it, for them, is to have another membership account. I have heartburn with that .... but "when in Rome". I have call NCUA, and they are of little use in clarifying and have said that each credit union is free to define the account/sub-account rules. I hate this, because it leaves the PUBLIC in limbo.

IF in doubt, I have always asked to be transferred to a NCUA qualified OFFICER to review the styling and coverage.

I wish, IGR, that this site would allow for attachments to show you the FDIC EDDIE report that DOES support what I have said. Individual, then ADD additional same individual plus POD styled account = 500K coverage --- we are mxing category ONE and Category 3 ownerships here.

See EDDIE RUN:
https://www.depositaccounts.com/blog/insuring-bank-deposits-over-250000-with-multiple-ownership-categories.html
second example shows SINGLE account PLUS a POD account, same owner, gives 500K

IGR | Feb 3, 2023 | 203 posts since 2020

bobert456, I made the corrections!!!
I am glad you bring NCUA issues to the light.
NCUA follows FDIC in general concept, but can be materially different in implementation.
I had to struggle with it myself where CU accepting Deposits as Sub-Account, in this case Beneficiaries and NCUA coverage would apply to all Member Deposits.
Moreover some CU would not put Beneficiaries on the Member Account title and I was advised to keep the copy of my summited Beneficiary designation form as a proof.
As a rule of thumb and for the piece of mind Depositor Must assume that the Beneficiaries are setup per Membership, rather than per Account or Deposit.
Therefor the claim of "reader Lou" that there are CU in his state of CA or anywhere that doesn't allow Beneficiary on per Deposit, but allows Beneficiaries with unequal Share is highly suspicious, despite the fact that Ken used his "tip"
usually it works as quoted from GTE;
"a member of GTE Federal Credit Union DBA GTE Financial, hereby establishes this account(s) for the designated beneficiary / beneficiaries in equal share"
Overall, the issues of Owner Deposit Coverage and Beneficiary share Distribution as POD must be separated!
"However, ... noted that if the depositor is attempting to insure more than $1.25 million and there are six or more different beneficiaries that are to receive different shares, the deposit insurance rules change and understanding the coverage can be more complex. In those situations, ... recommends calling toll-free 1-877-ASK-FDIC (1-877-275-3342) to speak with an FDIC deposit insurance specialist."
I am not going to because it doesn't presently concerns me, but there are plenty of the information beyond "reader Lou" "tips"
https://www.law.cornell.edu/cfr/text/12/745.4

My only advice is for everyone to keep the record of everything.
I lost thousands, because I relied on and failed to supervise my Account Records at IndyMac - the State of California Bank, BTW.

sams1985 | Jan 28, 2023 | 355 posts since 2022

Joint account owner is the easiest way to get to $500k without any major hurdles. I've confirmed this numerous times with banks and the FDIC text itself is pretty clear that the 250k is per depositor.

Another popular route is using a "sweep" program at a bank. Many reputable banks offer this. One example is Merchants bank of Indiana which has pretty good reviews on here. Their sweep program allows up to $1M in FDIC coverage.

Fidelity Investments has a similar program. I believe their coverage is well over $1 million.

JeffinEasternFL | Jan 28, 2023 | 470 posts since 2020

2 votes for the Sweep Program at MBoI! Plus: Great service, they answer phones locally and promptly, return messages daily, a nice internet interface that uses YOUR HUB Bank to generate ACH. They refund all in/out wires, the checks are free, and they remain in the top tier of APY, in high or low interest times!

mffarrell | Feb 3, 2023 | 10 posts since 2018

Going over the FDIC limit of $250K can be risky even if you have named beneficiaries. Whether or not you are insured over the $250K limit depends on how well the bank records are in compliance with FDIC requirements. I have yet to find FI that can unequivocally assure me that my money is protected above the $250K.

Your account records should include your beneficiaries on your account statements. None of mine do, so I always try to stay under the $250K limit.

IGR | Feb 4, 2023 | 203 posts since 2020

Life in general is a risky affair.
FDIC Coverage, unlike property, auto, health, etc... insurances works in particular, singular matter.
It is convenient to have Beneficiaries listed on statement, but it is not required by FDIC!
There, keep your own copies and your own records. In an unlikely event that FDIC payout is sought, you'll be given an opportunity to prove inadequacy of Bank's record.
Where you have no proof, no stories or explanations are accepted...this comes 101% out of personal experience.

For @Cal_Gal, avoid guessing and use of sometime ignorant CSR opinions.
The matter is very technical and doesn't come casually to all us lame.
Once the account has a beneficiary, the account is not owned by Depositor(s), Single or Joint no matter.
Once the account has a beneficiary, the Account belongs to Revocable Trust, albeit Informal.
In this case FDIC covers not Depositor's, but Trust Beneficiaries' Interest in the account.
There, one beneficiary - $250K, two Beneficiaries - $500K of coverage.....
And thanks to @Ltssharon we shall be aware now that the Coverage will only go up to $1,25M if there 5 Beneficiaries and Single "Owner" or up to $2,5M if the Informal Revocable Trust Account with 5 Beneficiaries is "Joint".
I have, though, no clue what would be the FDIC Coverage Limit if there are 5 "Owners" and 5 "Beneficiaries"...hope to never find out!

lou | Feb 4, 2023 | 1,028 posts since 2010

Actually, the FDIC does require the beneficiaries to be named or listed on the account statement. The NCUA, however, doesn't. For them it's fine as long as the credit union has a record of the beneficiaries in their files for the account.

IGR | Feb 4, 2023 | 203 posts since 2020

Provided that "reader Lou" base of knowledge is Investopedia or cursory Google search.
No matter how it is claimed to be done in "your state"....
"For purposes of meeting this requirement, the term “title” includes the electronic deposit account records of the IDI."
"FDIC regulations require that the specific names of the beneficiaries must be reflected in the IDI’s account records. This does not mean that the beneficiary names must be reflected in the account name or caption; provided that the name is in the IDI’s records, i.e., on the signature card or account agreement, this requirement is deemed satisfied."
I have no intention explaining the difference between "account statement" and "Account Record" in my "tedious, incomprehensible, grammatically/syntax butchered post"
I only respond because some sources, even if cited by Ken, could be materially misleading to other readers.
I only respond because I want to encourage other readers to be conducting self-studies to achieve individual understanding.

lou | Feb 4, 2023 | 1,028 posts since 2010

Okay, I should have said POD or ITF instead of beneficiaries. The major difference between NCUA and FDIC is the FDIC wants to see the designation of the trust in the account title while the NCUA doesn't require this. So anytime you get mail from the bank the title of the account should include the trust designation. Again this is not necessary if it is a credit union. Here is the language from the FDIC disclosure:

"The account title at the bank must indicate that the account is held pursuant to a trust relationship. This rule can be met by using the terms payable on death (or POD), in trust for (or ITF), as trustee for (or ATF), living trust, family trust, or any similar language, including simply having the word "trust" in the account title. The account title includes information contained in the bank's electronic deposit account records."

Cal_Gal | Jan 30, 2023 | 21 posts since 2018

I am looking at a similar situation & always believed that adding a POD does NOT extend FDIC coverage beyond the $250k I would auto get. I used the edie site and it agrees with me. However, during the past few months, several csr's have told me that adding a POD will increase the coverage to $500k. So, today, I read the fdic ins coverage booklet & on page 27-28 it states if 1 of 2 beni dies on a POD account, coverage is auto "reduced" to $250k no grace period. So that's probably why there is NO addtl coverage increase for 1 bene. https://www.fdic.gov/deposit/deposits/brochures.html

Ltssharon | Jan 31, 2023 | 230 posts since 2020

One really MUST make sure to change everything immediately if a beneficiary dies. If you have TWO beneficiaries then check EDIE and you will see the FDIC coverage goes to 500,000

IGR | Jan 31, 2023 | 203 posts since 2020

the theory of this is more complicated than practice.
there is a limit of coverage as $250K per depositor/owner OR beneficiary/trustee.
The coverage limit for Single Account is Nether a combination of Depositor AND Beneficiary;
1 owner+2 beneficiaries=2x$250K of coverage
2 owners+2 beneficiaries=2x$250K of coverage

there is NO limit on total amount of coverage.
In Joint account the coverage is per depositor/owner
There if someone wants to have JOINT account with soccer buddies - the coverage is 11x$250K=$2.75M
In POD/ITF account the coverage is per beneficiary/trustee
There if someone wants to have ITF account with soccer buddies - the coverage is 10x$250K=$2.5M, the coach needs to be included as trustee to bring the coverage to 11x$250K=$2.75M
The same goes to POD account.
There if someone has 10 grandkids named as beneficiaries - the coverage is 10x$250K=$2.5M,
if 11 - the coverage is 11x$250K=$2.75M.
"My Soccer Team", deceased players or living pets are not eligible beneficiaries, in that case one would need to consult an attorney how to setup the formal trust.
live soccer bodies and coach may be named Beneficiary or Trustee - "The owner and beneficiary no longer must meet the kinship requirement".
FDIC Recommends but doesn't Require SSN of beneficiaries to be on record with participating Institutions.
Institutions allowed to have internal Requirements and may refuse assigning account's beneficiaries/trustee without SSN provided.
To my limited knowledge, NCUA Policies are similar.
For in-depth study - https://www.fdic.gov/news/financial-institution-letters/2012/comprehensive_seminar.pdf

lou | Jan 31, 2023 | 1,028 posts since 2010

Your example with 11 beneficiaries only works if each beneficiary has an equal percentage.

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