FDIC Insurance Flashcards
What types of accounts are covered under FDIC insurance?
Deposits in insured institutions, including deposits in foreign currencies, regardless if the accountholder is a US citizen or resident or not.
What is the amount of FDIC insurance coverage?
$250,000.
What account types are recognized by FDIC for insurance coverage?
- single
- joint
- revocable trust
- irrevocable trust
- employee benefit plan
- self-directed retirement account
- corporation, partnership, and unincorporated association accounts
- government accounts
What does it mean when an account has “pass through” insurance coverage under FDIC?
Deposit insurance that passes through one or more types of intermediaries - including agents, nominees, and custodians – that have established a deposit account at the bank, as well as any additional levels of intermediaries, to the ultimate owner of the deposit account.
The death of a depositor will not affect insurance coverage for __ _____ following the owner’s death unless the deposit account is restructured.
6 months
If insured institutions merge, separate insurance of deposits continues for __ ____ after the date of the merger. CDs will continue to be insured separately until the first renewal that occurs __ ____ after the merger date.
6 months
6 months
What is SMDIA?
Standard maximum deposit insurance amount
How do sole proprietor accounts receive insurance coverage?
They will be treated as a single-account ownership.
How do funds owned by an individual in a revocable trust account with beneficiaries receive insurance coverage?
They will be insured up to the total number of different beneficiaries multiplied by the SMDIA (as long as each beneficiary has an equal share in the account).
In order for revocable trusts to receive insurance coverage based on the beneficiary designations, how must the account be titled?
The titling of the account must reflect the owner’s intention that upon his/her death, the funds int he account pass directly to the named beneficiaries.
For informal trusts, POD, ITF, ATF
For formal trusts, “living trust,” “family trust” or similar.
Does a beneficiary have to be a natural person to receive FDIC insurance coverage?
No, it may be a natural person, charitable institution or other nonprofit entity.
What is the special rule for accounts with more than 5 times the SMDIA and more than 5 beneficiaries? What accounts does this apply to?
If an account balance is greater than $1.25 million and has more than 5 beneficiaries, the insurance will be limited to the greater of 5x the SMDIA or the aggregate amount of the interests of each beneficiary on the account, limited to the amount of the SMDIA for each beneficiary.
This rule applies to revocable trust accounts only.
Where the owners of a revocable trust account are themselves the sole beneficiaries, the account will be insured as a ______ account.
joint
Account Owner “A” has a payable-on-death account naming his niece and cousin as beneficiaries, and A also has, at the same FDIC-insured institution, another payable-on-death account naming the same niece and a friend as beneficiaries. What is the maximum insurance coverage available to the account owner?
The maximum coverage available to the account owner would be $750,000. This is because the account owner has named only three different beneficiaries in the revocable trust accounts–his niece and cousin in the first, and the same niece and a friend in the second. The naming of the same beneficiary in more than one revocable trust account, whether it be a payable-on-death account or living trust account, does not increase the total coverage amount.)
Account Owner “A” establishes a living trust account, with a balance of $300,000, naming his two children “B” and “C” as beneficiaries. A also establishes, at the same FDIC-insured institution, a payable-on-death account, with a balance of $300,000, also naming his children B and C as beneficiaries. What is the maximum insurance coverage available for the account owner?
The maximum coverage available to A is $500,000, determined by multiplying 2 times $250,000 (the number of different beneficiaries times the SMDIA). A is uninsured in the amount of $100,000. This is because all funds that a depositor holds in both living trust accounts and payable-on-death accounts, at the same FDIC-insured institution and naming the same beneficiaries, are aggregated for insurance purposes and insured to the applicable coverage limits.)