If you or your clients have recently liquidated assets, and you’re wondering about FDIC insurance, you’re not alone. Krystal and Merrell break down everything you need to know about deposits, what is and isn’t covered, and how the $250,000 limit is applied to multiple account owners and beneficiaries.
:45 Why are our clients asking about FDIC insurance when they haven’t in years?
1:57 The Federal Deposit Insurance Corporation: What are the rules? What ownership categories and accounts are covered? (This applies to bank accounts, not credit unions.)
3:25 Stock accounts are not covered under FDIC insurance, neither are bond investments, mutual funds, life insurance policies, annuities, safe deposit boxes…if it’s considered an investment, it’s not covered.
4:00 Keep in mind checking accounts at brokerages (not a bank) are not covered by FDIC insurance.
4:40 What about non-citizens and non-human entities? Yes. $250,000 per depositor, per insured bank, per each account.
5:08 This is where it gets interesting. What are the account types? Single accounts (and why Krystal and Merrell advise their clients not to have single accounts without a payable on death designation)
6:30 Brief discussion about retirement accounts at FDIC insured banks
7:22 Joint accounts, owned by two or more people. Must be humans, not entities. Co-owners must have equal rights to withdraw.
8:11 Krystal and Merrell discuss how single accounts with a signer are problematic, and why the durable power of attorney is preferable. Banks tend to push joint ownership, and then if the signer (adult child for example) is sued, the account is in jeopardy. It can also complicate estate planning.
9:51 Revocable Living Trust accounts and FDIC insurance, calculating coverage limits among beneficiaries. Using a $750,000 account example, the grantor is not covered, but each beneficiary is covered up to $250,000.
11:52 What if the beneficiaries have an account at that same bank? What if the beneficiaries don’t know they are beneficiaries? Or the grantor doesn’t know where they bank? Only $250,000 is covered.
13:15 Reminding your clients that if they are all in one bank, they may not be fully covered under FDIC insurance.
14:20 When is this really a concern? With smaller banks rather than well-established national banks? Maybe not.
16:06 FDIC resources include a pamphlet and online estimator to give you an idea of what is being protected and what isn’t.