How to Title a Depositor Bank Account

Have you ever wondered about a bank account title, its meaning and its functions? Or do you belong to the cash is always king category?

It is important to understand how to title a depositor bank account if you prefer banking. It determines who has control of the account in question and to what extent they do.

You could save all your money in your home if you like. But even if you have industrial-strength safes or bank-style vaults, that would be a terrible idea if you have lots of cash. According to the FBI, Americans experienced 1,117,696 burglaries in 2019 alone.

It’s safe to assume that sooner or later, an enterprising thief will come across your financial stash and help themselves to it. It’s amazing how creative people can be concerning money they didn’t work for but want to have.

That is where bank accounts come in. You need them not just to store your money, but also to transact business with other people with a similar sense of financial self-preservation. So, it helps to learn how they work and how to ensure you don’t make mistakes when establishing one.

Typically, banks work as depositories for people’s money. If you want to save or invest money with a financial institution, you can open an account with them, deposit money in person or remotely and go on your way.

In exchange for saving money in a particular bank, that institution will pay you a little bit of interest. They may also offer you loans you could use to pursue more costly projects. You can also transact other kinds of business in the bank, such as sending or receiving money for personal use, paying employees their salaries and receiving payments for goods sold and services rendered.

On the other hand, the bank makes a lot of revenue from loan interest paid back by debtors, and other investments they make using their clients’ collective money.

The beauty of most banks is that their money is insured via the Federal Deposit Insurance Corporation. And so long as you have ​$250,000​ or less, you will get all your money back when theft occurs in your bank or the bank fails. The limit tends to apply per depositor, per ownership account, per FDIC-insured bank. This is why your depositor account title may make all the difference.

A depositor account title is the name that identifies the bank account ownership. It could be your official name or the name of the entity to which you belong. It could also include the name of the account co-owner, who may be your spouse.

Obviously, if a bank account is only in your name, you get to have the final say in how the money within it is spent. You don’t need to consult anyone about what to do. However, if you are a joint-owner with your spouse, both of you get to have an equal say.

On the other hand, if a company’s name is used as the depositor account title, all the authorized company owners or decision-makers get to have a say in how money in that account is spent.

​Read More:​ Checking Account Facts

Generally, the name on the deposit account title will influence everything from financial distributions to control over the account once you die. In addition, it affects tax payments and who gets to be responsible for them. So, you need to be careful about how you title a depositor bank account.

Below are bank account title examples worth considering and following, depending on your situation.

Usually, when someone dies, their bank account undergoes the probate process and is distributed with the remainder of their estate. However, if your bank account has a joint owner with rights of survivorship, that person will automatically inherit it without being subject to probate court decisions.

So, consider using both you and your loved one’s names as the bank account title if you are doing estate planning and want them to inherit your cash with minimal issues.

Many small business owners struggle to separate their personal and business expenses. As a result, they interfere with cash flow and run down their businesses. If you have this issue, consider using your business name as the depositor bank title.

All your clients, creditors and suppliers can use it to transact business with you. And then, you can redirect your salary to a different savings account and pay your personal bills from there.

Suppose you have issues in your marriage and your spouse controls your finances to the point of forcing you to establish joint accounts. And then, you find a way of making money without their knowledge. So, you plan to save enough funds to leave and get a divorce.

In that case, your depositor bank account title should have your official name only. That way, you can control every cent in that account.

However, if you are afraid that your spouse will find you via your financial transactions later on, you could register an entity, such as a limited company, and use its name as the bank account title. That way, you are unlikely to be found out.

​Read More:​ What Are the Procedures of Opening a Bank Savings Account?

Your depositor account title is very important. Not only does it affect your access to the account and whether you get to control it now, but it also influences who gets compensation and in what ratio, should your bank fail. So, think about it carefully before deciding what to do.