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Ownership Categories
Joint Accounts
A joint account is a deposit owned by two or more people. 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 living 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 $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 kinship 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 |
|
$
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
| Important! |
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 revocable trust account. |
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