Contact Us Online

Social Media Karp Law Blog Twitter Facebook

FDIC changes rules for revocable "living" trust accounts

04-01-2004 - Those with accounts titled in the name of a Living Trust and held at an FDIC-insured institution will soon find increased protection for the account in the event of bank failure. Beginning April 2004, FDIC rules governing Living Trust accounts will provide $100,000 insurance for every "qualifying beneficiary" in the event of an institution's failure. Qualifying beneficiaries are spouses, children, grandchildren, parents and/or siblings.

For example, if your trust designates that each of your three children receives the proceeds of your trust upon your death, your account will be insured up to $300,000 by the FDIC. Using the same example, if there is a joint trust between a husband and wife, that trust would have $600,000 worth of FDIC insurance because there are two grantors of the trust. The new rules also eliminate the existing requirement that beneficiaries of living trust accounts must be named in the records of the depository institution.

Back to Elder Law Legal Updates