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  • Writer's pictureStephen Williams

Securing your Financial Infrastructure for Divorce and Child Custody: FDIC Insurance

Updated: Apr 18

Having at least one bank account or more is one of those grown-up things that make up the infrastructure of your family’s day-to-day operations as well as funding your family’s future. It’s also the fuel for your small business or start-up as a business owner, CFO or controller. In Divorce and Child Custody cases, it can look really irresponsible, or even shady, if you’re clear on where your assets are and why you’ve allocated them the way you have. As we’ve seen in the last couple of weeks, it’s entirely possible that your bank just doesn’t have your money. That’s where FDIC insurance comes in.

What is FDIC Insurance?

FDIC protection refers to the insurance coverage provided by the Federal Deposit Insurance Corporation (FDIC), an independent agency of the United States government. Established in 1933 in response to the Great Depression, the FDIC's primary mission is to maintain public confidence in the nation's banking system by insuring depositors' funds held in FDIC-insured banks and thrift institutions.

FDIC protection covers deposits such as checking accounts, savings accounts, money market deposit accounts, and certificates of deposit (CDs). The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. This means that if an FDIC-insured bank fails, the FDIC will reimburse depositors for their insured funds up to the coverage limit.

It is important to note that FDIC insurance does not cover investment products, such as stocks, bonds, mutual funds, or annuities, even if they are purchased through an insured bank. Additionally, the FDIC does not insure safe deposit boxes or their contents.

To ensure that a financial institution is FDIC-insured, you can visit the FDIC's BankFind tool on their website or look for the FDIC logo at your bank's branch or website.

Does the FDIC cover business accounts?

Yes, the FDIC covers business accounts held at FDIC-insured banks. Business accounts, such as checking and savings accounts, owned by corporations, partnerships, and unincorporated associations (including for-profit and not-for-profit organizations), are insured under the FDIC's rules.

The standard insurance amount for business accounts is $250,000 per business entity, per insured bank. This means that each separate legal entity (e.g., corporation, partnership, or unincorporated association) with an account at an FDIC-insured bank is eligible for up to $250,000 in coverage.

It is important to remember that the FDIC insurance limit applies to the combined total of all accounts held by the business at a single bank, not per account. Also, note that FDIC insurance does not cover investment products, such as stocks, bonds, or mutual funds, even if they are purchased through an insured bank.

To maximize FDIC protection for business accounts, businesses can use strategies similar to those for individual accounts, such as staying within coverage limits, understanding ownership categories, and spreading funds across multiple FDIC-insured banks if necessary.

What are the best ways to utilize FDIC Protection?

To best utilize FDIC protection and safeguard your deposits, consider the following strategies:

  1. Confirm FDIC insurance status: Before depositing your money in a bank, verify that it is FDIC-insured. You can use the FDIC's BankFind tool or look for the FDIC logo on the bank's website or at a physical branch.

  2. Stay within coverage limits: Ensure that your total deposits at an FDIC-insured bank stay within the $250,000 limit per depositor, per insured bank, for each account ownership category. Remember that this limit applies to the principal and any accrued interest.

  3. Understand ownership categories: Familiarize yourself with the different account ownership categories recognized by the FDIC, such as single accounts, joint accounts, certain retirement accounts, revocable trust accounts, and irrevocable trust accounts. You can maximize your coverage by properly structuring accounts across these categories.

  4. Use multiple banks: If your deposits exceed the FDIC insurance limit at one bank, consider spreading your funds across multiple FDIC-insured banks to increase your coverage.

  5. Regularly review accounts: Periodically review your account balances and ownership structures to ensure they align with your financial goals and that your deposits remain within the FDIC coverage limits. Keep in mind that interest accrual and account changes may affect your coverage.

  6. Maintain accurate records: Keep clear and accurate records of your accounts, including ownership information, beneficiaries, and balances. This will make it easier for the FDIC to determine your coverage if a bank fails.

  7. Stay informed: Keep up to date with any changes in FDIC coverage limits, rules, or regulations. Occasionally, the FDIC may temporarily increase coverage limits or introduce new programs, as was the case during the 2008 financial crisis.

By following these guidelines, you can maximize your FDIC protection and ensure that your deposits are safeguarded in the event of a bank failure.

If you would like to learn more about how you, as a Committed Parent or Caring Relative, can stand up for yourself and be more effective in your Child Custody, Divorce, DHR or Adoption case, will you CLICK HERE to schedule your initial consultation at one of our offices?


This article contains general information and should not be construed as legal advice for you and or your unique situation. ~SW, Foxtrot

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