FDIC, POD and account naming requirements

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
tech123
Posts: 21
Joined: Wed May 16, 2012 11:30 am

FDIC, POD and account naming requirements

Post by tech123 »

I have a savings account at Ally bank and would like to increase my FDIC protection by adding beneficiaries. Based on reading I had done here and elsewhere, I had thought that I could simply add beneficiaries to the account, which would classify it as a revocable trust and all would be copacetic. However, in reading the FDIC published brochure (https://www.fdic.gov/deposit/deposits/b ... h.html#RTA), it seems that there is a specific requirement for the naming of the account:

"The account title at the bank must indicate that the account is held pursuant to a trust relationship. This rule can be met by using the terms payable on death (or POD), in trust for (or ITF), as trustee for (or ATF), living trust, family trust, or any similar language, including simply having the word "trust" in the account title. The account title includes information contained in the bank's electronic deposit account records."

So, does this mean that in order to get POD FDIC protection I actually have to change the title of the account? If so, what is the name of the account? At Ally, my account has, what they call, a nickname. Is it sufficient to simply change this from "Online Savings Account" to "Online Trust Account"?

Thanks for any clarification.
User avatar
dm200
Posts: 23214
Joined: Mon Feb 26, 2007 1:21 pm
Location: Washington DC area

Re: FDIC, POD and account naming requirements

Post by dm200 »

tech123 wrote: Wed Dec 13, 2017 2:12 pm I have a savings account at Ally bank and would like to increase my FDIC protection by adding beneficiaries. Based on reading I had done here and elsewhere, I had thought that I could simply add beneficiaries to the account, which would classify it as a revocable trust and all would be copacetic. However, in reading the FDIC published brochure (https://www.fdic.gov/deposit/deposits/b ... h.html#RTA), it seems that there is a specific requirement for the naming of the account:
"The account title at the bank must indicate that the account is held pursuant to a trust relationship. This rule can be met by using the terms payable on death (or POD), in trust for (or ITF), as trustee for (or ATF), living trust, family trust, or any similar language, including simply having the word "trust" in the account title. The account title includes information contained in the bank's electronic deposit account records."
So, does this mean that in order to get POD FDIC protection I actually have to change the title of the account? If so, what is the name of the account? At Ally, my account has, what they call, a nickname. Is it sufficient to simply change this from "Online Savings Account" to "Online Trust Account"?
Thanks for any clarification.
Check with Ally to be sure, but the banking (used for credit unions as well) term "title" or "titling" for savings/deposit accounts means the exact way the bank or credit union "names" or "titles" the account on its records (both paper and in the computer system). it does NOT mean the name or nickname you set up.
Alan S.
Posts: 12629
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: FDIC, POD and account naming requirements

Post by Alan S. »

If you have a savings account with no beneficiary, FDIC coverage is 250k.
If you add one TOD (or ITF or ATF) beneficiary, the coverage remains at 250k. (Per beneficiary)
If you add a second TOD beneficiary, the coverage limit rises to 500k, 750k if you have 3 TODs etc.

If the bank is shaky, it is a quick way to increase your limit of protection if you are already underinsured or wish to add to the account.

Of course, if you suddenly die the funds may not pass according to your ideal beneficiary split and your initial beneficiary may get shorted.
Post Reply