Areas of Practice - FDIC Estate Planning

Estate Planning Practice Group

New FDIC Rules on Living Trusts

The insurance rules for deposits held by a Living Trust, a favored estate planning technique, were revised by the FDIC Board of Directors as of January 13, 2004. Under the revised rules, the funds for each qualifying beneficiary of the trust will now be insured up to $100,000. Prior rules dictated that certain provisions in a living trust could impact this coverage, which is no longer the case.

Using the following criteria for a "qualifying beneficiary", which is still the account owner's spouse, children, grandchildren, parents and siblings, if there is one owner of the living trust and two beneficiaries then the account is now insured up to $200,000. In addition, if there is more than one owner of the living trust the insured amount would likewise change respectively. Two co-owners of the living trust account with two beneficiaries could result in deposits being insured by the FDIC up to $400,000.
These rules, as mentioned above, become effective April 1, 2004, however, the FDIC has further stated that deposits at an insured institution that collapses between now and April 1, 2004 would be covered if it is to the advantage of the depositor.

If you have any questions regarding the above, please contact the author of this client alert, Robert D. Scolaro, via email at rdscolaro@scolaro.com or via telephone at (315) 471-8111.