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General Questions
 How
can a depositor tell whether a bank is insured?
- Insured banks must display an official sign at
each teller window or station where deposits are regularly received. To find out
whether a particular bank or savings association has FDIC insurance coverage,
contact the FDIC using one of the resources listed on the back cover of this
guide
Whose
deposits does the FDIC insure?
- Any person or entity can have FDIC deposit
insurance in an insured bank located in the United States. A person does not
have to be a United States citizen or resident to have deposits insured by the
FDIC
Does FDIC insurance protect creditors and
shareholders?
-
FDIC insurance only protects depositors, although some depositors
may also be creditors or shareholders of an insured bank
Does the FDIC insure all investments sold by an
insured bank?
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The FDIC does not insure money invested in stocks, bonds, mutual
funds, life insurance policies, annuities, or municipal securities,
even if they were bought from an insured bank. The FDIC also
does not insure U.S. Treasury bills, bonds, or notes, but those are
backed by the full faith and credit of the United States government
How long does the FDIC take to pay insurance on
deposits after an insured bank fails?
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Federal law requires the FDIC to make payment as
soon as possible. Historically, the FDIC pays insurance within a few
days after a bank closing either by establishing an account at
another insured bank or by providing a check. Deposits purchased
through a broker may take longer to be paid because the FDIC may
need to obtain the brokers records to determine insurance coverage.
Customers with uninsured deposits receive the insured portion
of their account as described above. They will wait longer to receive payment
for some or all of their uninsured funds. The amount of uninsured funds they may
receive, if any, is based on the sale of the failed banks assets. Depending on
the quality and value of these assets, it may take several years to sell the
assets. As assets are sold, uninsured depositors receive periodic payment on
their uninsured deposit claim
Does the FDIC insure an unpaid cashiers check,
interest check, money order, or expense check issued by an insured
bank?
-
If a depositor holds one or more of these items from an insured
bank, and the insured bank fails before the item has cleared, the
FDIC will add the item to any other deposits held in the same
ownership category at the same insured bank. For example, an
outstanding interest check payable to a depositor will be added to
their other single ownership accounts, if any, and the total insured
up to $100,000
Does the FDIC insure safe deposit boxes if a bank
fails?
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The FDIC does not insure safe deposit boxes or their contents. In
the event of a bank failure, the FDIC in most cases arranges for an
acquiring bank to take over the failed banks offices, including
locations with safe deposit boxes. If no acquirer is found, box
holders would be sent instructions for removing the contents of
their boxes
How
does the FDIC determine ownership of funds
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The FDIC presumes that funds are owned as shown on the deposit
account records of the insured bank. The deposit account records of
an insured bank include account ledgers, signature cards,
certificates of deposit, passbooks, and certain computer records.
Account statements, deposit slips and cancelled checks are not
considered deposit account records for purposes of determining
deposit insurance coverage
When an insured bank fails, what evidence will
the FDIC require to determine the amount of insurance coverage for a
living trust account?
-
If an insured bank fails, the FDIC would look to the account title
to determine whether an account is held by a living trust. The FDIC
would then ask the owner to provide a copy of the trust document,
which the FDIC would review to identify the beneficiaries and
determine their interests in the account. The owner also may be
required to complete an affidavit attesting to the relationship of
the beneficiaries to the trust owner. Note that to qualify for
coverage in the revocable trust account category, the account title
must indicate the existence of a trust relationship. This
requirement may be met by including the terms
living trust,
family trust or similar language in the account title, or by
including acronyms indicating that the account is held by a trust
Can
I increase my insurance coverage by depositing funds with different insured
banks?
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Deposits with each FDIC- insured bank are insured separately from
any deposits at another insured bank. If an insured bank has branch
offices, the main office and all branch offices are considered one
insured bank a depositor cannot increase insurance coverage by
placing deposits at different branches of the same insured bank.
Similarly, deposits held with the Internet division of an insured
bank are considered the same as funds deposited with the
brick and
mortar part of the bank, even if the Internet division uses a
different name
Can
I increase my insurance coverage by dividing my deposits into several different
accounts at the same insured bank?
SEC_CODE_REF_0090001192884
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Deposit insurance coverage can be increased only if the accounts are
held in different categories of ownership. These categories include
single accounts, self-directed retirement accounts, joint accounts
and revocable trust accounts. The requirements for obtaining
separate insurance coverage in the ownership categories
Can
I increase coverage for my joint accounts by using a different co-owners Social
Security number on each account or changing the way the owners names are listed
on the accounts?
-
Using different Social Security numbers, rearranging the order of
names listed on accounts, or substituting
and
for or in
joint account titles does not affect the amount of insurance
coverage available to co-owners of joint accounts
What
happens to deposit insurance coverage after an account owner dies?
-
The FDIC insures a deceased persons accounts as if they were still
alive for another six months. During this grace period, the
insurance coverage of the owners accounts will not change unless
the accounts are restructured by those authorized to do so. Also,
the FDIC will not apply this grace period if it would result in less
coverage
How does the death of a beneficiary of a POD
account (informal revocable trust) affect insurance coverage?
- There is no grace period if a beneficiary (or all
beneficiaries) of a POD account passes away. Insurance coverage for the
funds in the account would immediately be reduced. There is no grace
period to allow the owner to restructure the account
How
does the death of a beneficiary of a living trust account (formal revocable
trust) affect insurance coverage?
- Like informal revocable trusts, the six-month
grace period does not apply to the death of a beneficiary named in a formal
revocable trust account. Unlike informal revocable trusts, the terms of the
formal revocable trust may provide for a successor beneficiary or some other
redistribution of the trust funds. Depending on these terms, the insurance
coverage may or may not change. For more information, contact the FDIC using one
of the resources listed on the back cover of this guide
What
happens to my coverage if I have deposits at two insured banks that
merge?
- When two or more insured banks merge, the
deposits from the assumed bank continue to be insured separately for at least
six months after the merger. This grace period gives a depositor the opportunity
to restructure his or her accounts, if necessary. CDs from the assumed
bank are separately insured until the earliest maturity date after the end of
the six-month grace period. CDs that mature during the six-month period and are
renewed for the same term and in the same dollar amount (either with or without
accrued interest) continue to be separately insured until the first maturity
date after the six-month period. If a CD matures during the six-month
grace period and is renewed on any other basis, it would be separately insured
only until the end of the six-month grace period
What are fiduciary accounts?
- These are deposit accounts owned by one party but
held in a fiduciary capacity by another party. Fiduciary relationships may
include, but are not limited to, an agent, nominee, guardian, executor, or
custodian. Common fiduciary accounts include Uniform Transfer to Minors
Accounts, escrow accounts, Interest On Lawyer Trust Accounts IOLTA, and deposit
accounts obtained through a broker
What are the FDIC disclosure requirements for fiduciary accounts?
- The fiduciary nature of the account must be
disclosed in the banks deposit account records e.g.,
Jane Doe as Custodian
for Susie Doe or First Real Estate Title Company, Client Escrow Account.
The name and ownership interest of each owner in the account must be
ascertainable from the deposit account records of the insured bank or from
records maintained by the agent (or by some person or entity that has agreed to
maintain records for the agent). Special disclosure rules apply to
multi-tiered fiduciary relationships. If an agent pools the funds of several
owners into one account and the disclosure rules are satisfied, the funds of
each owner will be insured as that owners funds
How
does the FDIC insure funds deposited by a fiduciary?
- Funds deposited by a fiduciary on behalf of one
or more persons or entities the owner are insured as the deposits of
the owner if the fiduciary meets the disclosure requirements for
fiduciary accounts (See no.18)
Would
funds deposited with a fiduciary be insured separately from the owner's other
account?
- Funds deposited by a fiduciary on behalf of one
or more persons or entities the owner would be added to any other deposits of
the owner (or owners) at the same insured bank and the total would be subject to
the insurance limit for the applicable ownership category. For example: A
broker purchases a CD for $100,000 on a depositors behalf at ABC Bank in his or
her name alone and the depositor already has a checking account in his or her
name alone at that same bank for $15,000. The two accounts would be added
together and insured up to a total of $100,000 in the single ownership account
category, with $15,000 uninsured
How
does FDIC insurance cover funds deposited for a deceased persons estate?
- Funds deposited by an executor or administrator
for a deceased persons estate are added to any funds maintained in the name of
the deceased person at the same bank, if any, and the total is insured up to
$100,000. Funds belonging to the estate of the deceased person, whether held in
the name of the deceased or deposited by the executor or administrator, are
insured separately from the funds owned by the executor, administrator, or
beneficiaries of the estate. Decedent accounts are not insured on a
per-beneficiary basis; they are insured up to $100,000 as the funds of the
estate
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