FDIC and Beneficiaries
 

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.

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

FDIC: Your Insured Deposits.

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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.

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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…

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.

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.

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.

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.

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

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