Bank regulations in the United States allow depositors to title personal bank accounts using different ownership/legal title names. Generally, the type of bank deposit account title you use depends on the protections desired for the depositor and the account beneficiaries. Bank insurance protection -- FDIC coverage from the Federal Deposit Insurance Corporation -- may be different depending on which title you use when you open a bank account. A question that is often asked is who will receive the money upon the depositor's death. The title of the deposit account may address this issue.
Use a single title for your bank deposit accounts when you want to hold the funds only on one person's name. For deposit insurance purposes, all single accounts under the same name are added and insured up to $250,000 per institution by the FDIC. With this account title designation, only the person named has authority to withdraw funds unless another agent is specified by a legal agreement.
Establish a deposit joint account if you want to designate two or more persons as the owners. For FDIC insurance purposes, each owner is insured up to $250,000 (sums of all accounts) in the same bank institution. Under this title arrangement, all co-owners have a right to withdraw funds from the account.
Title the bank account as a trust if you desire to name beneficiaries upon your death. There are different titles used under a trust arrangement, such as "POD" -- payable on death -- or "ITF" -- in trust for. These titles are assigned in the bank signature card agreement. The FDIC insures each beneficiary up to $250,000 in the same institution. Upon the death of the depositor or depositors, trust account funds will be distributed to the designated beneficiaries.
Discuss your account title options with a bank staff or with an attorney if you have a complex legal situation. If you want to designate more than one beneficiary upon death, make sure you designate a percentage for each, unless you want equal shares distributed to all.
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