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Ownership Categories
Joint Accounts
For insurance coverage purposes, a joint account is a deposit owned by two
or more people, with no beneficiaries designated3. FDIC insurance covers joint
accounts owned in any manner conforming to applicable state law, such as joint
tenants with right of survivorship, tenants by the entirety and tenants in
common.
To qualify for insurance coverage under this ownership category, all of
the following requirements must be met:
- All co-owners
must be people. Legal entities such as corporations, trusts,
estates or partnerships are not eligible for joint account coverage.
- All co-owners
must have equal rights to withdraw deposits from the account.
For example, if one co-owner can withdraw deposits on his or her
signature alone but the other co-owner can withdraw deposits
only with the signature of both co-owners, the co-owners would
not have equal withdrawal
rights.
- All co-owners
must sign the deposit account signature card unless the account
is a CD or is established by an agent, nominee, guardian, custodian,
executor or conservator.
If all of these requirements are met, each co-owner's shares of every
joint account that he or she owns at the same insured bank are added together
with his or her other joint account shares at the same bank, and the total
is insured up to the SMDIA, currently $250,000.
The FDIC assumes that all co-owners' shares are equal unless the deposit
account records state otherwise.
The balance of a joint account can exceed $250,000 and still be fully
insured. For example, if the same two people jointly own both a $350,000
CD and a $150,000 savings account at the same insured bank, the two accounts
would be added together and insured up to $500,000, providing up to $250,000
in insurance coverage for each co-owner. This example assumes that the
two co-owners have no other joint accounts at the bank.
There is no relationship
requirement for joint account coverage. Any two or more people
that co-own funds can qualify for insurance coverage in the joint
account ownership category provided the requirements listed above
are met.
Insurance coverage
of joint accounts is not increased by rearranging the owners' names or
by changing the styling of their names.
Alternating the
use of "or," "and" or "and/or" to separate
the names of co-owners in a joint account title also does not affect
the amount of insurance coverage provided.
In addition, using different Social Security numbers on multiple accounts
held by the same co-owners will not increase insurance coverage.
| Account Title |
Deposit Type |
Account
Balance |
| Mary and John Smith |
MMDA
|
$ 230,000
|
| Mary or
John Smith |
Savings |
300,000
|
| Mary or John or Robert Smith |
CDs |
270,000
|
| Total Deposits |
|
$
800,000
|
| Insurance coverage for each owner is calculated as follows: |
| Owners |
Ownership Share |
Amount Insured |
Amount Uninsured |
| Mary |
$ 355,000 |
$ 250,000 |
$
105,000 |
| John |
355,000 |
250,000 |
105,000 |
| Robert |
90,000 |
90,000 |
0 |
| Total |
$ 800,000 |
$ 590,000 |
$ 210,000 |
Explanation:
- Mary's ownership
share in all joint accounts equals 1/2 of the MMDA account ($115,000),
1/2 of the savings account ($150,000), and 1/3 of the CD
($90,000), for a total of $355,000. Since her coverage in the joint account
ownership category
is limited to $250,000, $105,000 is uninsured
-
John's ownership share in all joint accounts is the same as Mary's, so
$105,000 of John’s deposits is uninsured
- Robert's ownership share in all joint accounts equals 1/3 of the CD,
or $90,000, so his share is fully insured
3 If
the co-owners of a jointly held account have designated one or more beneficiaries
who will receive the deposit when the co-owners die, the account would
be insured as a trust account. See the ownership categories for revocable
and
irrevocable trust accounts.
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