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I have three questions:

Generally, in the US, can a beneficiary receive the inherited benefits for a certificate of deposits (CD) in a single bank if an account holder (single) who purchased the CDs is still alive but the bank the account holder purchases the CD goes bankrupt?

Generally, in the US, if an account holder (single) has more than $250K (e.g., $300K) in CDs in a single bank and named one beneficiary but before the account holder passes away, the bank goes bankrupt, then how much maximum benefits can the account holder and the beneficiary receive?

Generally, in the US, if an account holder (single) has more than $250K (e.g., $300K) in CDs in a single bank and named one beneficiary but suddenly, the account holder passes away before the bank goes bankrupt, then how much maximum benefits can the beneficiary receive?

Thank you.

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    Question #1 baffles the heck out of me.
    – RonJohn
    Mar 14, 2023 at 4:51
  • what i'm asking is can the beneficiary receive any benefits if the account holder is still alive but the bank goes bankrupt? Or the beneficiary can ONLY receive benefits ONLY if the account holder passes away? Mar 14, 2023 at 4:57
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    Your question still baffles me. When does a beneficiary ever get his/her money? When the owner dies, of course.
    – RonJohn
    Mar 14, 2023 at 5:07
  • So even if the bank goes bankrupt, as long as the owner is still alive, the beneficiary will not get any money and the maximum the owner will be reimbursed is $250K, correct? Mar 14, 2023 at 6:06
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    The money goes to the account holder. The beneficiary is not the account holder I have no clue why you might think anything else would happen.
    – keshlam
    Mar 14, 2023 at 13:25

1 Answer 1

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Once the owner dies, beneficiary becomes the new owner. The CD might have to go through probate; at the very least you must present evidence of the owner’s death.

Account owners (which includes beneficiaries when they become the owners) are only guaranteed $250k protection, but it’s standard practice that all depositors get all their money.

Note that SVB and Republic are still open. The web sites are up, doors open and computers doing the things computers do for banks. The beneficiary might have to go through some extra red tape when the bank’s assets and customers are taken over by a new bank, but probably not.

Remember: the FDIC exists.

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    The FDIC have set a pretty solid precedent with the three largest bank failures in the US all depositors been fully protected. I doubt they'd be able to get away with only 250K from now on.
    – littleadv
    Mar 14, 2023 at 6:04
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    I think that could be merely an exception, if other FDIC insured banks fail, I would say it's still better to err on the side of caution that each account holder is entitled to a maximum of $250K? Mar 14, 2023 at 6:08
  • Sure; the written guarantee is the one to rely on if you are concerned about it. Most folks managing that amount of ready cash know this and do what they feel is appropriate.
    – keshlam
    Mar 14, 2023 at 13:27
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    $250k is the amount guaranteed. However, SVB has huge amounts of money, for example $90bn in treasury bonds. Those $90bn alone are enough to pay for more than 40% of the deposits, and they have much more money (just not readily available). So whatever FDIC does, people will get much more than $250k.
    – gnasher729
    Mar 14, 2023 at 15:26
  • @HelloDarkWorld You "think that could be merely an exception". Sure, it might be. That's why the standard recommendation for individuals with more than $250K in the bank is to spread it around. Not that many people have that much money in banks.
    – RonJohn
    Mar 14, 2023 at 16:03

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