4000 - Advisory Opinions
Account Maintained Jointly By an Individual and a Corporation
July 31, 1990
Valerie J. Best, Senior Attorney
This letter confirms our recent telephone conversation concerning a joint account established by an individual and a corporation in a savings association.
Federal Home Loan Bank Board (``FHLBB'') Ruling
Enclosed for your review is a letter dated July 19, 1984 from Norman H. Raiden, General Counsel, FHLBB to David E. Meders. In that letter, Mr. Raiden concludes that an account owned jointly by an individual and a corporation would be treated as a joint account for deposit insurance purposes if it meets the following requirements:
1. The account must be a valid "tenancy in common" under state law. "Tenancy in common" means that the interest of each owner in the account does not pass by right of survivorship to the surviving owner. Instead, each tenant's interest becomes part of the tenant's estate upon his or her death.
2. Each co-owner must personally sign the account signature card.
3. Each co-owner must possess withdrawal rights. In his letter, Mr. Raiden states that if the individual is actually an agent for the corporation and does not have withdrawal rights on his own behalf, then the account would not be treated as a joint account. Instead, the funds in the account would be added to any other funds deposited by the corporation in the same savings association, and the sum would be insured to a maximum of $100,000.
FHLBB and the Federal Savings and Loan Insurance Corporation ("FSLIC") were abolished by law on August 9, 1989. The FDIC now insures deposits in savings associations as well as banks. The law also required the FDIC to eliminate the differences that existed in deposit insurance coverage at banks and savings associations. Consequently, the FDIC has issued uniform rules for banks and savings associations. The rules go into effect on July 29, 1990. However, certificates of deposits (and other time deposits) will not be affected until the first maturity date after July 29, 1990.
Only natural persons may own joint accounts under FDIC regulations. Thus, an account established by an individual and a corporation and deposited in a savings association will not be insured as a joint account after the FDIC regulations go into effect. Instead, the true ownership interest of each co-owner would be added to any other deposits held by the respective owners and insured to a maximum of $100,000.
In summary, a joint account in a savings association in the name of an individual and a corporation will be insured as outlined in the attached letter from Mr. Raiden until July 29, 1990 or, in the case of a certificate of deposit, until its first maturity date after July 29, 1990. Thereafter, only natural persons qualify for joint account deposit insurance coverage. Thus, after the FDIC regulations for savings associations go into effect, the true ownership interest of each co-owner in an account maintained jointly by an individual and a corporation will be added to any other deposits held by the respective owners and insured to a maximum of $100,000.
Please call me at (202) 898-3812 if you have any questions.