Common Bank Ownership Categories

The most common ownership categories are:

Single Accounts

These are deposit accounts owned by one person and titled in that person’s name only. An individual account is an account with only one account owner, and may be withdrawn only upon the signature of the account owner or his/her legally authorized representative. All single accounts at the same insured bank are added together and the total is insured up to $100,000.

Joint Accounts

These are deposit accounts owned by two or more people. With a joint account, the property of the account belongs to each account owner. Each account owner may withdraw up to and including the entire amount on deposit. Upon the death of one account owner, the deceased party’s ownership in the account passes to the surviving account owner(s). If both owners have equal rights to withdraw money from a joint account, each person’s shares of all joint accounts at the same insured bank are added together and the total is insured up to $100,000. If a couple has a joint checking account and a joint savings account at the same insured bank, each co-owner’s shares of the two accounts are added together and insured up to $100,000, providing up to $200,000 in coverage for the couple’s joint accounts.

Revocable Trust Accounts

These are deposits held in either payable-on-death (POD) accounts or living trust accounts. Payable on death accounts, also known as testamentary or Totten Trust accounts are the most common form of revocable trust deposits. A POD account is an informal trust without a written trust agreement. These informal revocable trusts are created when the account owner signs an agreement, usually part of the bank’s signature card, stating that the deposits will be payable to one or more named beneficiaries upon the owner’s death. The beneficiaries are named in the account records; however, they have no right to any funds in the account during the trustee’s lifetime. Each account owner may withdraw up to and including the entire amount on deposit. Upon the death of one account owner, the deceased party’s interest in the account passes to the surviving account owners. Upon the death of all account owners the trust will terminate and all remaining funds shall be owned by the beneficiaries.

Living trusts or family trusts are formal revocable trusts created for estate planning purposes. The owner of a living trust controls the deposits in the trust during his or her lifetime. A formal Trust Account is an account held by one or more trustees for the benefit of one or more beneficiaries pursuant to a written trust agreement.

Certain Retirement Accounts

These are deposit accounts owned by one person and titled in the name of that person’s retirement plan. Only the following types of retirement plans are insured in this ownership category:

• Individual Retirement Accounts (IRAs) including traditional IRAs, Roth IRAs, Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plans for Employees (SIMPLE) IRAs
• Section 457 deferred compensation plan accounts (whether self-directed or not)
• Self-directed defined contribution plan accounts
• Self-directed Keogh plan (or H.R. 10 plan) accounts

All deposits that an individual has in any of the types of retirement plans listed above at the same insured bank are added together and the total is insured up to $250,000. For example, if an individual has an IRA and a self-directed Keogh account at the same bank, the deposits in both accounts would be added together and insured up to $250,000.

This entry was posted on Sunday, October 12th, 2008 at 11:55 am and is filed under Banking and CD Guide. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.