Many people set up guardianship accounts for a relative or friend as a way to manage money for that person. One common example is a Uniform Gifts to Minors Act (UGMA) account, which a parent or other adult maintains for a child under 18. Another example is an account that a person with a "power of attorney" would control on behalf of someone who may be ill, frail, living far away or otherwise unable to handle funds.

The FDIC often is asked: If I serve as guardian for someone else's account, will those funds be considered mine, or partly mine, and maybe put my deposits over the $100,000 insurance limit? Here's the answer: Under state law, the guardian is considered the custodian of the account but not the owner of the money. And because FDIC insurance generally is based on who owns a particular account, that means the FDIC insurance coverage is tied to the person you're helping.

Example: A woman's name is on two accounts at a bank. One is a $50,000 UGMA account she established for her son. The other is her own $75,000 account. Because the son legally is the owner of the UGMA money, the FDIC would insure that $50,000 account separately from the mother's $75,000 personal account, and both accounts would be within the federal insurance limit.

Be aware that all the funds a person owns in both regular accounts and guardianship accounts are added together for insurance purposes. That means if a father has two accounts at a bank—one a $90,000 savings account and the other a $20,000 checking account for which his daughter has power of attorney—the FDIC would recognize the father as the owner of the full $110,000 at the bank, leaving $10,000 over the insurance limit.

Also important: If someone is only serving as the guardian for a deposit account and not as an owner or co-owner of the funds, that relationship must be indicated in the account records on file at the institution. Otherwise, the FDIC could consider the guardian to own some or all of that money, possibly putting him or her over the insurance limit at that institution.

For more information about guardian accounts, ask a customer service representative at your bank or savings institution. If you need additional help from the FDIC, contact our Division of Compliance and Consumer Affairs as noted on our "For More Information" page.

There Are Special Rules for Deposit Insurance When Banks Merge

As banks continue to merge, customers of merging institutions ask the FDIC what happens to their $100,000 deposit insurance coverage. Customers are most concerned about what happens if they have accounts at two institutions that merge, and the combined funds exceed $100,000. In general, accounts at the two institutions before the merger would continue to be separately insured for six months after the merger—and longer with some certificates of deposit (CDs).

This grace period helps depositors in at least two ways. First, it limits potential losses if the "new" bank fails soon after the merger. Second, the grace period gives depositors extra time to become fully insured, if necessary, by restructuring the accounts at the merged institution or moving excess funds to another insured institution.

If you have questions, contact your insured institution or our consumer affairs division listed on our "For More Information" page.

IRS Tax Refunds Are Safer By Direct Deposit

If you're due a tax refund from the Internal Revenue Service, you have two choices for receiving your money: by paper check in the mail or by direct deposit into an account at a financial institution. But if you want to receive your IRS refund in the safest and fastest way possible, the U.S. Treasury Department says there is one clear choice, and that's direct deposit. Why? The Treasury says direct deposit recipients are 26 times less likely to have a problem than people who receive paper checks, which can be lost, misplaced or stolen out of mailboxes. A direct deposit refund also arrives faster, especially if you send your return to the IRS electronically using an "e-filing" service offered by computer software programs, professional tax preparers and even some financial institutions.