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Single Accounts SINGLE ACCOUNTS ( I. Definition - fdic pod accounts qualified beneficiaries


Single Accounts SINGLE ACCOUNTS ( I. Definition-fdic pod accounts qualified beneficiaries

Single Accounts
SINGLE ACCOUNTS (12 C.F.R. ? 330.6)
I. Definition
Single accounts contain funds that are either owned by one natural person or treated as if
they are owned by one natural person. The single accounts category includes the
following:
1. Individually owned accounts (no beneficiaries);
2. Fiduciary accounts, held for a single account owner;
3. Accounts in the name of a deceased person or the estate of a deceased person;
4. Sole proprietorship accounts; and
5. Community property accounts held in the name of one person.
II. Insurance Limit
A deposit held by an individual in his or her own capacity in a single account is insured
for a maximum of up to $250,000.
III. Requirements
The requirement for this category of ownership is that the depositor must be a natural
person. If an owner meets the requirements for deposit insurance coverage under any of
the other FDIC deposit insurance categories available to an individual (e.g., a single
owner opening an account as payable-on-death and naming beneficiaries), then the
deposit will be insured under that applicable category.
IV. Types of Single Accounts
1. Individually Owned Accounts
Individually owned accounts are accounts owned by natural persons (i.e., human beings).
The most common single account is a deposit account opened by an individual on his or
her own behalf. The depositor maintains the account and owns the funds on deposit.
These accounts are simply titled in the owner's name, such as "John Smith."
A common misconception is that when a person opens an account naming one or more
eligible beneficiaries, it is insured under the single account category. This is an incorrect
interpretation of the deposit insurance rules. An account naming one or more eligible
beneficiaries would instead be insured as a revocable trust account.
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Single Accounts
2. A Fiduciary, Custodian, or Agency Account That is Held on Behalf of One
Natural Person Who is the Actual Owner of the Funds
A person or entity can deposit funds and maintain an account on behalf of another
individual sometimes referred to as the "principal" (i.e., the actual owner of the funds).
When the person or entity opening the account has no ownership rights to the deposited
funds, the representative is typically acting as a fiduciary, custodian, or agent on behalf of
the principal. In situations where there is a single principal, the deposit insurance
coverage will pass-through the person or entity opening the account to the principal, and
the funds would be insured as the single account of the principal.
For example, the Uniform Gifts to Minors Act ("UGMA") and the Uniform Transfers to
Minors Act ("UTMA") accounts are custodial accounts with pass-through deposit
insurance coverage provided as the minor's single account. For deposit insurance
purposes, the child is considered the principal or sole owner of funds on deposit (even if
state law still deems the child as a minor). Deposit insurance coverage passes through the
custodian (e.g., parent or other party) to the principal (i.e., the child) and the funds are
insured as the child's single account for up to $250,000.
Example 1
Facts:
John Bradley is the custodian for his daughter's UTMA account. His daughter Julia is 7.
The account has a balance of $250,000 and is titled to reflect that the account is an
UTMA. At the same IDI, John also keeps his MMDA in his name alone with a $145,000
balance. John wants to know if all the deposits are insured.
Rules:
(a) If the FDIC requirements are met, deposit insurance coverage passes through the
custodian to the actual owner of the funds on deposit.
(b) The owner of the UTMA account is insured as though she opened the account herself.
(c) For deposit insurance purposes, UTMA and UGMA deposits are owned by the child
and insured as single accounts.
(d) The custodian's personal funds at the same IDI are insured separately.
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Single Accounts
Answer:
Example 1:
UTMA account and custodian's personal account are insured separately
Account Title Deposit Balance Insured Uninsured
Type Amount Amount
John Bradley as CD $250,000 $250,000 $0
custodian for Julia
Bradley, UTMA
John Bradley MMDA $145,000 $145,000 $0
John Bradley is fully insured for $145,000 and Julia Bradley is fully insured for
$250,000. The UTMA account is properly titled as a fiduciary account (e.g., "UTMA"
indicating a fiduciary relationship). Deposit insurance coverage passes through John, the
custodian, to Julia, the actual owner of the funds. The funds are insured as Julia's single
account for up to $250,000. John's individual account (MMDA) at the same IDI is
insured as his single account separately from the custodial account. Therefore, John's
MMDA with $145,000 is insured separately from the UTMA account.
3. "Decedent Account" or "Estate Account"
When a depositor dies, his or her funds often are collected and placed into a deposit
account which is commonly called a "decedent account." Typically an executor,
executrix, or administrator is named or designated to perform tasks on behalf of the
deceased person's estate. These tasks can include collecting and selling the estate's
assets, filing and paying taxes and debts, and disbursing funds according to the provisions
of the decedent's Last Will and Testament (or according to the applicable state law).
When opening a decedent account, the administrator typically uses language such as
"Estate of John Doe," or "John Doe, Decedent."
For deposit insurance purposes, the FDIC considers the deceased to be the sole owner of
the account. Funds held in a decedent account are added together with any other single
accounts the deceased may have had at the same IDI and the total is insured up to the
SMDIA of $250,000.
A common misconception is that an estate account can be insured for more than
$250,000 if beneficiaries are named on the account.
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