JOINT ACCOUNTS (12 C.F.R. ? 330.9)
A joint account is a deposit owned by two or more individuals that satisfies the
requirements set forth below.
II. Insurance Limit
Each co-owner of a joint account is insured up to $250,000 for the combined amount of
his or her interests in all joint accounts at the same IDI. In determining a co-owner's
interest in a joint account, the FDIC assumes each co-owner is an equal owner unless the
IDI records clearly indicate otherwise.
1. Co-owners Must be Natural Persons: A natural person is a human being;
therefore, legal entities, such as corporations or trusts, cannot own a joint account.
2. Co-owners Must Have Equal Withdrawal Rights: When an account purports
to have three or more co-owners, it raises the issue of whether all co-owners have
equal rights to withdraw from the joint account. For example, the account title
"John Jones or Sally Jones and Mary Jones" suggests unequal withdrawal rights.
Specifically, the titling suggests that John can withdraw funds by himself but
Sally and Mary must act together to withdraw funds. As a result, account
ownership is unclear and could result in uninsured funds. This situation can occur
when the depositor and the IDI are attempting to establish an informal power of
attorney ("POA") arrangement. An example of such a scenario would be a parent
allowing both children acting together to withdraw funds on behalf of the parent
due to illness. Depositors may wish to consider whether to use a formal POA
arrangement to avoid confusion with respect to deposit insurance determination.
If the withdrawal rights are unequal, the account will not be insured as a joint
3. All Co-owners Must Personally Sign the Signature Card: The general rule is
that each co-owner must sign the joint account signature card. The FDIC
recognizes electronic signatures. The FDIC waives the signature requirement in
some cases. Negotiable instruments and CDs, for example, are exempt from the
signature requirement. Depositors can hold negotiable instruments or CDs as
joint accounts assuming they satisfy the other requirements of a joint account.
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In addition, when an agent opens a joint account on behalf of his or her clients, the FDIC
does not require the clients to personally sign the signature card, although the agent will
be required to provide documentation proving ownership of the funds should the IDI fail.
IV. Co-owned Testamentary Accounts are not Insured as Joint Accounts
As with single accounts, a common misunderstanding among depositors and IDI
employees is that a jointly held account which names beneficiaries is insured under the
joint account category. However, the joint account definition does not include co-owned
testamentary accounts. If two or more people own an account that they title as a payable-
on-death account (or with similar testamentary language), and identify beneficiaries, their
account will be analyzed as a revocable trust account.
Two co-owners of a joint account are each insured up to the SMDIA
Account Title Deposit Type Balance
Cathy or Rich Rush CD $500,000
Cathy and Rich Rush have a jointly held CD (with equal withdrawal rights) at ABC Bank
for $500,000. They want to know if they are fully insured.
(a) Each co-owner of a joint account is insured up to $250,000 for the combined amount
of his or her interests in all joint accounts of the same IDI.
(b) The FDIC assumes each co-owner is an equal co-owner unless the IDI records clearly
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In this case, Cathy and Rich co-own only one joint account. The FDIC assumes each of
the two depositors owns half of the joint account. Cathy's half of the $500,000 is
$250,000; therefore, she is fully insured. Similarly, Rich is fully insured since his half of
the account is $250,000.
Insurance coverage for each joint account owner is calculated as follows:
Joint Account Owner Co-owner's Insured Uninsured
Interest Amount Amount
Cathy Rush $250,000 $250,000 $0
Rich Rush $250,000 $250,000 $0
Total $500,000 $500,000 $0
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How do I add a beneficiary?Click on the Profile tab.Click Update Beneficiaries.Click the Add or Modify button.
Title: Joint Accounts
Subject: Financial Institution Employees Guide to Deposit Insurance
Author: Division of Depositor and Consumer Protection
Creator: Acrobat PDFMaker 10.1 for Word
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