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Account Ownership Categories
This chapter provides a detailed discussion of the FDIC's deposit insurance coverage rules and requirements for each of the following ownership categories:
Single Accounts
(12 C.F.R. § 330.6)
Definition
Single accounts are deposits owned by one person. This ownership category includes:
- Accounts held in the name of a business that is a sole proprietorship, such as Vince Johnson DBA (doing business as) Vince's Delicatessen
- Accounts held in the name of a decedent or by the executor or administrator of a decedent's estate
- Single name accounts containing community property funds
- Deposits held on behalf of an individual pursuant to a fiduciary relationship
- Official items payable to one person
- Some accounts that fail to qualify for insurance in other ownership categories
Important!
Since all of the deposit accounts listed above are insured in the same ownership category — single accounts — any of these accounts owned by the same person at the same bank will be added together and insured up to the insurance limit.
Also, although they may be owned by one person, revocable trust accounts (including payable on death accounts and living trust accounts) and self-directed retirement accounts (including IRAs) are not insured as single accounts provided the accounts meet the requirements for these ownership categories.
All deposits owned by one person at a bank are added together and insured up to
$100,000.
Insurance Limit
All deposits owned by one person at an insured bank are added together and insured up to $100,000.
| Example #3: |
| Account Title |
Deposit Type |
Balance |
| Marci Jones |
NOW |
$5,000 |
| Marci Jones |
Savings |
20,000 |
| Marci Jones |
CD |
100,000 |
| Marci’s Memories(a sole proprietorship) |
Checking |
25,000 |
| Total |
|
$150,000 |
| Amount Insured |
|
$100,000 |
| Amount Uninsured |
|
$ 50,000 |
Explanation:
Marci Jones has four single accounts at the same bank: three accounts held in her name alone and one account held by her business, which is a sole proprietorship. The deposits in these accounts are added together and the total balance, $150,000, is insured to $100,000. Consequently, $50,000 is uninsured.
Sole Proprietorship Accounts
A sole proprietorship is a business wholly owned by one person, in contrast to a business that is incorporated or owned by a partnership. Some examples of sole proprietorship account titles are: "Vince Johnson DBA (doing business as) Vince's Delicatessen" or "Mary's Hair Salon, Mary Peterson, Proprietor." Such titles do not include an indication of incorporation (for example, ABC, Inc. or XYZ, Ltd.).
Deposits held in the name of a sole proprietorship are added to any other single accounts of the business owner, and the total is insured up to $100,000. Thus, although a person who is the sole owner of an unincorporated business opens a separate account in the name of his business, the business account is not separately insured from his personal accounts at the same bank.
Important!
In some cases, a sole proprietorship may have more than one signatory on the account (for example, a husband and wife). If both signatories have equal authority to withdraw funds from the account, the account may be insured in the joint account category unless there is clear evidence in the deposit account records that only one person is the owner of the funds.
Decedent Accounts
Deposits held by an executor or administrator for the estate of a deceased person are added together with other deposits held solely in the name of the deceased person, and the total is insured up to $100,000. Deposits belonging to the estate of the deceased person held in a fiduciary capacity are insured separately from any personal deposits owned by the executor, administrator, or any beneficiary of the estate at the same bank. The fiduciary capacity of the executor or administrator must be disclosed in the account title.
Important!
The deposits of a decedent's estate are insured solely to the decedent, up to $100,000, regardless of the number of beneficiaries who may have an interest in the decedent's estate.
Example #4:
Linda Martinez is the executor of her Aunt Anita's estate. Anita's two children are the beneficiaries of the estate. If Linda deposits $200,000 in a single bank, only $100,000 will be insured and $100,000 will be uninsured.
Community Property Deposits Held in the Name of One Person
Some states are "community property" states. This means that while deposits held in one name alone by a husband or wife in a community property state are considered jointly owned by both spouses, they are considered single accounts for deposit insurance purposes.
Fiduciary Accounts Held for an Individual
If single account funds are deposited on behalf of an individual by a fiduciary, the funds in the account will be insured as the single account funds of the principal, added to any other single accounts of the principal at the bank, and insured up to $100,000.
Example #5:
Jennifer Bradley is the custodian on a Uniform Transfer to Minors Act (UTMA) account for her child, Julia. If the recordkeeping requirements for fiduciary accounts are met, the account is insured in the single account category as Julia's funds, separately from deposits that the mother, Jennifer, may own in her name alone.
Example #6:
Steven McLean buys a CD through a deposit broker. A few months later, he sees a bank advertisement offering a good interest rate and unknowingly purchases a CD directly from the same bank that issued the brokered CD. The deposits placed through the broker will be added with the deposits Steven placed at the bank directly and the total will be insured up to $100,000.
Accounts That Fail to Qualify for Coverage in Other Ownership Categories
Each ownership category contains requirements that must be met in order to obtain separate insurance coverage in that category. When these requirements are not met, the funds usually revert to the single account category for insurance coverage. The specific requirements for each ownership category are discussed in the specific sections of this chapter.
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