Requirements for Opening Checking w/ POD

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Question:

When opening a checking account with POD, is it required that the term "POD Account" print on the bank statement or is it sufficient that the signature card is marked and the POD designation with the name of the beneficiary is in the core related to the account? Can the Account just read "John Doe" or does it have to say "John Doe, POD Account"?

Answer:

Designation of the account needs to conform to state law, which may require that "Pay on Death" or "POD" appears in the account styling (it would not have to appear on the checks). If your state law is silent, or only requires that the deposit contract disclose the depositor's intent that the funds be held for or paid out to one (or more) designated pay-on-death beneficiaries (the number of beneficiaries may be limited by state law, too), then you need to make sure that you also follow FDIC requirements to ensure that the FDIC will provide "revocable trust" treatment to such accounts for insurance purposes.

The FDIC requires that the "POD" annotation appear in the account records, which can include a code or flag in the electronic records, but the beneficiaries have to be identified in those records, as well. Note that the FDIC does not require that the designation appear within the account's "styling" or on the signature card.

First published on BankersOnline.com 10/1/12