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$250K FDIC insurance made permanent

8-18-2010- President Obama recently signed legislation permanently setting the maximum FDIC insurance at $250,000 per depositor, per insured banking institution, for each account ownership category. (Coverage had been scheduled to revert back to $100,000 in 2014.) This is obviously a shot in the arm for the banks and good news for consumers. If, for example, you have a CD worth $250,000 at Bank A and another CD worth up to $250,000 at Bank B, you can be assured that both CD's will be fully insured by the FDIC.

 

For those with an account titled in the name of a revocable trust,  the formula is a little more complicated: The $250,000 coverage is per beneficiary on a proportionate basis. To illustrate, let's say you have $1,250,000 in a revocable trust at Bank A, and there are 5 beneficiaries of your trust. If each beneficiary is designated to receive an equal share ($250,000), then the full $1,250,000 in your trust is protected. But if one beneficiary gets 50% of your assets ($625,000), that leaves $375,000 of his share unprotected ($625,000 - $250,000). FDIC protection would thus cover only $875,000 of your trust assets ($1,250,000 - $375,000) at that institution.

 

The same rules that apply to revocable trust also apply to “Payable on Death” or “In Trust For” accounts.

 

For more information, log on to the FDIC website. The FDIC also has a toll-free answer line, 877-ASK-FDIC.

 

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