The FDIC insures a deceased person's accounts as if the person were still alive for another six months. During this grace period, the insurance coverage of the owner's accounts will not change unless the accounts are restructured by those authorized to do so. Also, the FDIC will not apply this grace period if it would result in less coverage.

There is no grace period if a beneficiary (or all beneficiaries) of a POD account passes away. Insurance coverage for the deposits in the account would immediately be reduced. For example: A mother has deposited $500,000 in a POD account at an insured bank with her two children named as the beneficiaries (the children have equal beneficiary interests) in the account records of the bank. While the owner and both beneficiaries are alive, the account is insured up to $500,000. Upon the death of one beneficiary, the mother's deposit insurance coverage in the POD account is immediately reduced to $250,000 and $250,000 is uninsured.

Like informal revocable trusts, the six-month grace period does not apply to the death of a beneficiary named in a formal revocable trust account. Unlike informal revocable trusts, however, the terms of the formal revocable trust may provide for a successor beneficiary or some other redistribution of the trust deposits. Depending on these terms, the insurance coverage may or may not change. For additional assistance, contact the FDIC using one of the resources listed under "For More Information from the FDIC."