FDIC and Beneficiaries

[Golfer222]

Does adding a beneficiary to a savings acount double the FDIC limit to 500,000

[Bill14564]

Does adding a beneficiary to a savings acount double the FDIC limit to 500,000

Not a lawyer but would say no. There is still one account so the insured amount would remain $250,000.

[retiredguy123]

Not a lawyer but would say no. There is still one account so the insured amount would remain $250,000.
Not exactly. Here are the rules. Very complicated. Pour a drink before reading them.

FDIC: Your Insured Deposits (https://www.fdic.gov/regulations/resources/brochures/your_insured_deposits-english.html#:~:text=FDIC%20Fast%20Fact%3A,to%20%2 4250%2C000%20for%20that%20beneficiary).

[dewilson58]

///

[Bill14564]

Not exactly. Here are the rules. Very complicated. Pour a drink before reading them.

FDIC: Your Insured Deposits (https://www.fdic.gov/regulations/resources/brochures/your_insured_deposits-english.html#:~:text=FDIC%20Fast%20Fact%3A,to%20%2 4250%2C000%20for%20that%20beneficiary).

Still just one account. Different account category (the beneficiary triggers the Revocable Trust) but still one account. With just one beneficiary it would still be insured for $250,000.

What this does change: Normally, two accounts at the same bank held by the same person would be insured to a combined $250,000 (NOT $250,000 each). By adding a beneficiary to ONE of the accounts moves that account into the Revocable Trust category. Therefore, the account holder would be insured for $250,000 on the savings account plus $250,000 on the revocable trust. A total of $500,000 but only $250,000 maximum on each of the two different account categories.

(See difference between joint account and beneficiary. See also table above example 4 and text of example 5)

And most importantly, talk to a licensed professional for guaranteed accurate financial advice.

[retiredguy123]

///

[Keefelane66]

Split your account amongst several institutions to minimize risk. FDIC insurance per account.
after the 2008 financial crisis that saw the failure of investment banks Lehman Brothers and Bear Stearns and Washington Mutual Bank, the first of more than 300 banks to close from 2008-2010. People lost money by not following the maximum account rule…

[retiredguy123]

I don't use banks for large investments, just a checking account and credit card. But, in my opinion, the best way to increase your FDIC insurance is to spread your money around to several different banks. A convenient way to do that is to buy brokered CDs through Fidelity or Vanguard, making sure that the CDs are FDIC insured and issued by different banks, and that you don't have more than $250K in any one bank.

[retiredguy123]

Still just one account. Different account category (the beneficiary triggers the Revocable Trust) but still one account. With just one beneficiary it would still be insured for $250,000.

What this does change: Normally, two accounts at the same bank held by the same person would be insured to a combined $250,000 (NOT $250,000 each). By adding a beneficiary to ONE of the accounts moves that account into the Revocable Trust category. Therefore, the account holder would be insured for $250,000 on the savings account plus $250,000 on the revocable trust. A total of $500,000 but only $250,000 maximum on each of the two different account categories.

(See difference between joint account and beneficiary. See also table above example 4 and text of example 5)

And most importantly, talk to a licensed professional for guaranteed accurate financial advice.
I agree. But, it does seem to mean that you can increase your FDIC insurance from $250K to $500K or even more by opening several accounts in one bank and adding beneficiaries to the different accounts.

[Bill14564]

I agree. But, it does seem to mean that you can increase your FDIC insurance from $250K to $500K or even more by opening several accounts in one bank and adding beneficiaries to the different accounts.

It does seem that way. A single account for $250,000, a joint account for $500,000, a revocable trust with two beneficiaries for $500,000 would seem to increase your total insurance to $1.25M at that one bank.

But I agree, a cleaner method would be to spread the funds across several banks.

[laboutj]

It does seem that way. A single account for $250,000, a joint account for $500,000, a revocable trust with two beneficiaries for $500,000 would seem to increase your total insurance to $1.25M at that one bank.

But I agree, a cleaner method would be to spread the funds across several banks.

The $250K limit is per customer, not account. If you have $1MM, split it over 4 different financial institutions.

[Bill14564]

The $250K limit is per customer, not account. If you have $1MM, split it over 4 different financial institutions.

Read the FDIC information linked in a previous reply.

[retiredguy123]

The $250K limit is per customer, not account. If you have $1MM, split it over 4 different financial institutions.
It is per customer if all of your accounts are named exactly the same way. But, you can have several accounts that are named differently. For example, a husband and wife can have two separate individual accounts and a joint account, and get $1 million of FDIC insurance. You can also have an IRA account that adds another $250K for the husband and also for the wife. And, you can have an individual account with no beneficiary, and another individual account with a named beneficiary and both accounts will have $250K of insurance. There is almost no limit to the amount of FDIC insurance you can get from a single bank, if you structure them correctly.

[vlm790]

Called Citizens and they said since hubby and I have our account in our trust with son as beneficiary we have 250,000 each person so total of $750,000 for one account

[Golfer222]

That is what my bank said-250 K for the primary and 250 K for each beneficiary

[champion6]

Does adding a beneficiary to a savings account double the FDIC limit to 500,000Shouldn't you contact the institution where the savings account was opened? Really - nobody in the forum will stand up for you if needed.

[Golfer222]

The usual "why ask here" comment came a little late than I expected. you are slipping

[dewilson58]

The usual "why ask here" comment came a little late than I expected. you are slipping

I wanted to give someone else a chance.

:mornincoffee:

It's an excellent post.

[midiwiz]

Does adding a beneficiary to a savings acount double the FDIC limit to 500,000

I'll try to not be snarky on this one...... dificult but ok...

FDIC doesn't insure based on account holders it insures based on account/person relationship UP TO 250,000 meaning

John has 5 accounts, 1 checking and 4 savings "type" of accounts (MM, CD, etc) John has an ACCUMULATED balance of $325,000. John is only covered for $250,000 of that $325,000.

[Craftylady]

The account has to be I trust for a “qualifying “beneficiary. Each single acct $250,000 Each joint acct $125,000 for each acct holder. Owner plus qualifying beneficiary $250,000 more money than that use more than one bank

[dewilson58]

I'll try to not be snarky on this one...... dificult but ok...

FDIC doesn't insure based on account holders it insures based on account/person relationship UP TO 250,000 meaning

John has 5 accounts, 1 checking and 4 savings "type" of accounts (MM, CD, etc) John has an ACCUMULATED balance of $325,000. John is only covered for $250,000 of that $325,000.

Great job on not being snarky.
Bad job on answering the question.
:evil6:

[gmdds]

You could be covered for several million at one institution….it all depends on how the accounts are set up. See example below:

Account 1…Husband Depositor TOD Grandchild 1
Account 2…Husband Depositor TOD Grandchild 2
Account 3…Husband Depositor TOD Grandchild 3
Account 4…Wife Depositor TOD Grandchild 1
Account 5…Wife Depositor TOD Grandchild 2
Account 6…Wife Depositor TOD Grandchild 3

In the above scenario, each account is covered for up to $250,000, for a total of $1.5M in FDIC coverage.

The scenario could go on and on, depending on the different accounts set up variations, beneficiaries, etc.

The FDIC has an online worksheet/wizard, to help you see if you are covered.

[Bill14564]

I wanted to give someone else a chance.

:mornincoffee:

It's an excellent post.

Still, it was an interesting question and useful to do the research and learn the different scenarios. Why some choose to ignore the previous replies and FDIC information in order to post incorrect information continues to be a mystery to me.

[dewilson58]

Why some choose to ignore the previous replies .......................in order to post incorrect information continues to be a mystery to me.

This would be an excellent new thread.

:mmmm:

[retiredguy123]

The account has to be I trust for a “qualifying “beneficiary. Each single acct $250,000 Each joint acct $125,000 for each acct holder. Owner plus qualifying beneficiary $250,000 more money than that use more than one bank
Note that you don't need to set up a formal trust. You can create an informal trust just by designating a "payable on death" beneficiary or multiple beneficiaries on the bank's signature card. A charity can be a beneficiary.

[Morty S]

You can have several accounts at the same bank, just keep them all under 250,000.

[nn0wheremann]

Does adding a beneficiary to a savings acount double the FDIC limit to 500,000
No.

[Whitley]

Does adding a beneficiary to a savings acount double the FDIC limit to 500,000

Quick answer, assume not. There is an option to protect your deposit. Look into an ICS (aka Sweep) account. Link it to your main account and choose a target for the prime account (I choose 50k for highly used accounts and 10k for the others). Anything over your target is swept to the ICS account which deposits your cash in various banks, keeping the balance in each under 250,000.00)
A point many may not know, if you have multiple accounts (different bank account numbers) i, let's say Chase, you are not insured up to 250,00. in each. The total accounts are combined (per tax id# or ss#). Another point to keep in mind, Many banks have merged over the past five years (some are BBT, Ameris, Suntrust, Fidelity and many more). If you had 250k in two different banks that have merged, you lost your protection. On the bright side, if this is a concern to you, things can not be that bad.
Have a Happy St Pats Day

[Golfer222]

From FDIC:
Does adding beneficiaries to my account change my FDIC insurance coverage?
You can designate up to six (6) individuals per account as beneficiaries who will each receive equal shares upon the acount holder's passing. Each beneficiary is eligible for up to $250,000 in FDIC coverage per account owner. By setting up beneficiaries on your account, you can increase your FDIC coverage. For example, joint account owners who qualify for $250,000 each in FDIC coverage would increase their coverage to $750,000 each if three beneficiaries are named to their Savings account. You can calculate how adding beneficiaries to your deposit accounts and having accounts in different ownership categories will affect your FDIC coverage by visiting the FDIC's Electronic Deposit Insurance Estimator at FDIC.gov/edie.

[JGibson]

Thanks finally an informative thread, better than talking about dog poop.

It's a good policy to research banks and see what they invest in and who they’re in bed with.

There is a reason a certain somebody pulled money out of certain financial institutions.

I’ll leave it at that or else I’ll get dinged for politics.

[joelfmi]

Not a lawyer but would say no. There is still one account so the insured amount would remain $250,000. call the bank you have money if they cover beneficiary for insurance first. some banks do and some don't

[Karmanng]

NOOOO never heard of such a thing

[Bill14564]

call the bank you have money if they cover beneficiary for insurance first. some banks do and some don't

The question was FDIC coverage. That does NOT vary from one bank to another. See the link to the FDIC fact sheet posted early in the thread.