Informal Trusts - Equal Shares Unless Noted?

Question:

The FDIC states that for insurance coverage on accounts set up as an informal trust "ITF" or "POD", it is assumed that the beneficiaries will be considered to have equal shares unless otherwise noted. If a financial institution does not provide an option for a customer to specify beneficiaries' interest, and assumes it will be equal, could there be any other liabilities to the institution if there are claims the intent from the owner was different?

Answer:

Survivorship would be addressed entirely by state law; deposit insurance coverage is irrelevant to survivorship. You need to review the laws of your state, but the model language on which many states base their law indicates that ownership is pro rata among survivors. For example, if there are three survivors, each gets one third. If four, one fourth, etc. If your state law provides for the original payee's expression of a different intent it would be unique.

First published on BankersOnline.com 5/10/10