Lately I’ve been seeing clients who have spread their accounts over many different banks. My sense is that people do this over time, chasing good interest rates, and not exactly meaning to have so many banks in the mix.
Maxing out interest rates is, of course, an excellent goal and a fun game to play. But I keep seeing these two problems with having so many banks:
Problem #1: After you die, your kids are going to have a heck of a time gathering those assets. Going to all of the different banks, finding the right person to help at each one, filling out each bank’s different forms – it’s intensely time-consuming. Most parents I meet want to make the process easy for their children, and this is not it.
Problem #2: While you are still living, you could reach a point where you need your agent under your power of attorney to take over banking on your behalf. Banks are very strict about how they work with agents under powers of attorney, and often refuse to work with them. One of the best strategies for having bank staff be comfortable with working with your agent is for bank staff to know you, and if possible, your agent. And you can’t reasonably get to know bank staff across many banks, but if you focus on just a few, you can develop those relationships.
The flip side of this, of course, is that the FDIC insures accounts only up to $250,000 per person, per bank. So you may not want to keep more than that in any one bank.
Maxing out interest rates is a worthy endeavor, but try to play the game within a limited handful of banks. That will make things much easier for you and your kids.
About the Author: Alexis Levitt practices elder law, special needs planning, estate planning, and veteran’s benefits. She sits on the board of the Massachusetts chapter of the National Academy of Elder Law Attorneys and represents it on the Massachusetts Coalition for Serious Illness Care. Alexis also sat on the board of the Norwell Council on Aging. Her office is in Norwell. You can reach her at 781-740-7269 or visit her website and blog for more information atwww.alexislevitt.com.