I have read the regs regarding the POD requirements and want to make sure I'm understanding them correctly. In order to qualify as a POD account for additional FDIC insurance, the account must be specifically titled John Smith POD Joan Smith. Titling the account John Smith on the signature card and having beneficiary documentation attached listing Joan Smith does not qualify, correct?

You don't have to identify the beneficiary (Joan) in the account title, although most POD accounts I have seen do. It is enough to title the account "John Smith POD," naming the beneficiary or beneficiaries in the account records or documentation (signature card/sheet).

Imagine how banks in states allowing multiple beneficiaries would include six beneficiaries in an account title. Wouldn't work.

Thanks so much! I kept thinking we needed to have the POD's listed on the signature cards.

All beneficiaries must be listed specifically in the bank's deposit record (you can't just show "all children" and get any extra FDIC coverage; hopefully none of us would allow that anyway). For most banks, the "deposit record" is the signature card for the account. If your documentation process consists of more than just a signature card be sure your documentation is thorough and consistent.

As John indicated, it is not necessary to specifically list the beneficiaries in the account title, referencing the fact that the account is a testamentary account (John Smith POD) is sufficient for the account title. Many customers don't want beneficiary names showing on the title because the title becomes the mailing address that other family members might see.

Is there a reference FDIC posting that has the requirement for "POD" in the account title on the computer records?

The signature cards states it is a POD and we have all POD's sign additional POD documentation and retain all of this in our records. We don't list out all POD's on our system so I wasn't 100% positive we were covered. From everyone's responses I'm thinking we are covered.

Try FIL 99-2008 or Federal Register Vol. 73 Number 190, section 330.10 (a) revised Required Intention.

John,
I have an additional question that I can not seem to get an answer to: We have used "similar language" using Trustee/Benf in our titles when opening accounts for informal trusts accounts. We now know that "similar language" must be POD, ITF or ATF. My question is-if our electronic file reads Jane Doe ATF John Doe do we also need to change all of our existing signature cards and passbooks or is changing the electronic file sufficient to provide full FDIC insurance on all benf's?
Charlene

We were told that all of the signature cards must match what is on our CIF record.

C Straznitskas - In my prior life, we didn't allow the use of ITF and ATF because of state statutes that could restrict the use of monies held in trust from being used as collateral on loans (totten trust issues--very messy). Subsequent state code revisions recognized the concept of POD accounts; therefore, we used "POD" specifically to conform with state law and the account definitions in our off-the-shelf customer agreements.

Point is...just because FDIC allows the use of a certain term for additional coverage does not necessarily make is a wise choice for your FI. Research your state statutes. You will likely find the information in the statutes relating to the Uniform Multiple Party Act (if applicable in your state).

We have a copy of the current FDIC insurance regulations here on BOL in our Alphabet Soup section.

http://www.bankersonline.com/abcsoup/abcsoup.html

As noted above, check out section 330.10.

I ask as well. We have the signature card (the contract which says the account owner is John Smith) and then is also noted as POD Jill Smith. All correspondence is to John Smith. Does that need to say John Smith POD? We have customers that do not want children/grandchildren to see on the statement John Smith POD Jill Smith. Our forms are by Bankers Systems and clearly the left side of the form is owners and then POD is marked with the beneficiary name and address. Do we really have to put John Smith POD on the mailing side for FDIC insurance?

If you looked at the account on your system, or printed a listing of accounts from your system by account name, would John's account show as a testamentary account (John Smith POD)?

Brenda's question is the key to your question. The account must show as a testamentary account on your books (the trial balance showing all account owners). The FDIC regulation clearly says that "The required intention in paragraph (a) of this section that upon the owner’s death the funds shall belong to one or more beneficiaries must be manifested in the title of the account ...." That means that the FDIC won't go digging into signature cards to see if any of them includes a POD designation. They need to know WHICH account documents to look at by identifying the POD designations in account titles.

None of that requires you to correspond with your customer (statement, letter, audit confirmation, or anything else) in such a way as to "tip his hand" to third parties. You should be able to suppress the POD designation in those communications.

Sec. 330.10 Revocable trust accounts
(a) General rule. Except as provided in paragraph (e) of this section, the funds owned by an individual and deposited into one or more accounts with respect to which the owner evidences an intention that upon his or her death the funds shall belong to one or more beneficiaries shall be separately insured (from other types of accounts the owner has at the same insured depository institution) in an amount equal to the total number of different beneficiaries named in the account(s) multiplied by the SMDIA. This section applies to all accounts held in connection with informal and formal testamentary revocable trusts. Such informal trusts are commonly referred to as payable-on-death accounts, in-trust-for accounts or Totten Trust accounts, and such formal trusts are commonly referred to as living trusts or family trusts.

(Example 1: An individual has a living trust account with four beneficiaries named in the trust. The account owner has no other revocable trust accounts at the same FDIC-insured institution. The maximum insurance coverage would be $400,000 [$1,000,000], determined by multiplying 4 (the number of beneficiaries) times $100,000 [$250,000] (the current SMDIA).

Example 2: An individual has a payable-on-death account naming his niece and cousin as beneficiaries and, at the same FDIC-insured institution, has another payable-on-death account naming the same niece and a friend as beneficiaries. The maximum coverage available to the account owner would be $300,000 [$750,000]. This is because the account owner has named three different beneficiaries in the revocable trust accounts. The naming of the same beneficiary in more than one revocable trust account, whether it be a payable-on-death account or living trust account, does not increase the total coverage amount.)

(b) Required intention. The required intention in paragraph (a) of this section that upon the owner’s death the funds shall belong to one or more beneficiaries must be manifested in the title of the account using commonly accepted terms such as, but not limited to, in trust for, as trustee for, payable-on-death to, or any acronym therefore. In addition, for informal revocable trust accounts, the beneficiaries must be specifically named in the deposit account records of the insured depository institution. The settlor of a revocable trust shall be presumed to own the funds deposited into the account.

We use Banker's System for the signature card. The Ownership box has the owner name, POD marked, and all beneficiaries names and addresses listed all within that ownership box. The owner signs the signature card and the system has all of the information that the account is a POD account, the beneficiaries are named, the owner is the owner / signer. The required intention is stated on the signature card and in our account records on the system. If an owner comes into the bank to add an additional beneificary, a new signature card is generated and the additional beneficiary name and address is added. The owner signs the new signature card and the system is changed to reflect the new additional beneficiary. All signature cards are imaged. If you pull up the account on the system it clearly denotes that the account is a POD account and names the beneficiaries. No one need go further than the system documentation to see the intent of the account.

This dog has been sleeping over a month but I need to kick it and wake it up.
BrendaC said:
We have numerous Bankers System sig cards that have the owner's name with no "POD" after it, but the POD box is checked. I understand that this does not meet the "in the title" requirement.
On our system, if we look up an account it will show the customer's name, POD will not be part of the name but there is a separate part of the screen (or we can do a report) that shows that the account is a POD account. The hair splitting issue is whether this meets the following language from slide 26 of the FDIC telephone seminar materials where it states:
"This requirement is met if either a bank record (such as a CD or signature card) has the following in the title or if the
titling of the accounts in the bank’s name and address electronic file uses the following :
Example #1: John Smith and Mary Smith, POD
Example #2: John Smith and Mary Smith
POD"
We can readily find all the POD accounts on our system but the magic "POD" is not listed as part of the name on the account.
Thoughts?

I would not put much stock in the wording on the slides from a seminar, even those prepared by the FDIC. The FDIC follows its regulations, and you should be concerned with the wording of section 330.10(b):


If you are concerned, contact the FDIC to find out if a printout of accounts with a POD flag or indicator where appropriate will meet the requirement. I think it will.

Thanks John - I know I woke the sleeping dog, have I now reached the point of beating a dead horse?

Best of a New Year to you and all BOLers.