Listen to Lawrence – FDIC – Joint Accounts

July 1, 2020

Dear clients and friends,

In a prior email, called FDIC PART TWO, I introduced the concept that you are entitled to $250,000 of FDIC insurance protection per depositor, per bank and per ACCOUNT OWNERSHIP CATEGORY…..and there are eight categories. IN FDIC PART FOUR, I discussed the first category, SINGLE ACCOUNTS. In this email I will discuss the second category…..JOINT ACCOUNTS. This category applies to NCUA insured credit unions in the same manner.



Not surprisingly, a joint account is a deposit owned by two or more people. Many, if not most of you, have these accounts and take them for granted. Each joint owner’s share of every joint account held at one insured bank are added together and qualify for $250,000 of insurance, in addition to any insurance from other categories (like from SINGLE ACCOUNTS discussed in my previous email).

But there are rules you have to follow to get insurance from this category:

All joint owners must be living people. Legal entities like corporations, LLCs, partnerships, trusts and the like do not qualify as proper joint owners under this category.

Dead people do not qualify either! You may laugh, but I have heard that upon the death of one joint owner, the survivor left the decedent’s name on the joint account hoping to get another $250,000 of FDIC insurance protection, but alas, it did not and does not work. Kudos for trying!

But wait! There is a six month grace period! For up to six months after the death of a joint account owner, insurance continues for the decedent’s interest in the joint account as though he or she were still alive, assuming the titling of the account does not change. In effect, the deceased is still considered a living joint account owner for six months; the survivor’s account reverts to a SINGLE ACCOUNT thereafter.

All joint owners must have equal rights to withdraw funds from the account. For example, if one joint owner can withdraw funds on his or her own but the other joint owner needs the consent of the other, then this fails the equal rights test.

All joint owners must sign the signature cards (or their agents), although this requirement is waived for CDs.


Mike and Carol Brady have a joint account at one bank with $500,000 and Mike also has a joint account with his oldest son, Greg with $100,000. How much is insured? Carol’s allocation is $250,000, half the joint account and is fully covered. Greg’s allocation is $50,000, half the joint account and is fully covered. Mike’s allocation is half the joint account with Carol and half the joint account with Greg for a total amount of $300,000, but is only insured up to $250,000, with $50,000 uninsured.

There are a couple of other things you should know :

It is assumed that all joint owner shares are equal unless the deposit account records state otherwise; and

There is no benefit of increased insurance by rearranging the owners’ names or by changing the styling of their names. A Mike and Carol account is the same as a Carol and Mike account. A Mike C. Brady and Carol J. Brady account is the same as a Mike and Carol account. Also, alternating the use of “or,” “and” or “and/or” to separate Mike and Carol’s names does not affect the amount of insurance. In addition, using different Social Security numbers on multiple accounts held by the same joint owners will not increase insurance coverage.

The joint account definition does not include jointly owned accounts that name a beneficiary. If two or more people own an account that they title as payable- on-death (pod), transfer on death (tod), in-trust-for (itf), or similar testamentary language and which identifies beneficiaries, such account will belong to the REVOCABLE TRUST ACCOUNT category (with an additional $250,000 insurance protection) and not to the JOINT ACCOUNT category.

EXAMPLE at one insured bank (or credit union)

Mike and Carol joint CD: $300,000
Carol and Mike joint money market: $150,000
Marcia, Mike and Carol joint saving: $300,000
Carol personal checking account: $100,000
Mike and Greg, co-owned unincorporated business checking account,
dba Brady Consultants: $200,000

Mike: 1/2 CD $150,000
1/2 money market $75,000
1/3 savings $100,000
1/2 dba checking $100,000

Mike’s total joint account interests equal $425,000 of which $250,000
is insured and $175,000 is uninsured. A joint dba account is insured
under the joint account category but only if it meets the requirements of
a joint account (owners are natural persons, have equal withdrawal
rights, and have signed the signature card).

Carol: 1/2 CD $150,000
1/2 money market $75,000
1/3 savings $100,000
100% checking account $100,000

Carol’s total joint account interests equal $325,000 of which $250,000
is insured and $75,000 is uninsured. In addition, Carol’s personal
checking account of $100,000 is completely insured under the single
account category and its separate $250,000 of insurance.

Marcia: 1/3 savings $100,000

Marcia’s total joint account interests equal $100,000 of which $100,000
is insured and $0 is uninsured.

Greg: 1/2 dba checking $50,000

Greg’s total joint account interests equal $50,000 of which $50,000 is
insured and $0 is uninsured.

I hope this helps.

Please forward this information to your friends and relatives.

As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.

Let’s stay connected.


Stay safe!