FDIC Insurance, Accountholder Citizenship, and Power of Attorney

Question: We have a savings account with a power of attorney on it, and the individual who is power of attorney is a citizen of the United States. The funds in the account belong to his sister, who is not a citizen of the U.S. She is asking us if the funds in the account are covered by FDIC insurance, seeing as how she isn't a citizen - is the principal covered?

Answer: The citizenship status of a depositor doesn't affect FDIC insurance coverage. On a POA account, it is insured as an agency account under 330.7 of the FDIC insurance rules:

Sec. 330.7 Accounts held by an agent, nominee, guardian, custodian or conservator: (a) Agency or nominee accounts. Funds owned by a principal or principals and deposited into one or more deposit accounts in the name of an agent, custodian or nominee, shall be insured to the same extent as if deposited in the name of the principal.

The funds would be insured as belonging to the principal and aggregated with any other individual funds the principal has in any other single ownership accounts in the same institution for a total of $100,000 coverage.

Copyright © 2001 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 11, No. 12, 12/01