FDIC Insurance Limits for Living Trust Owned Bank Accounts
During the early summer of 2008, largely as a result of predatory lending practices and reckless borrowing by homeowners, the US Banking system is under significant pressure. The US Senate Banking Committee has identified 90 banks, S&L’s or Thrifts as having marginal reserves to stay in business. One of the biggest US Thrifts, IndyMac Bank, has recently failed and has been seized by Regulators. IndyMac depositors are understandably anxious and many have made a run on the bank to get their deposits out, which was the final straw in the Thrifts collapse. The good news for depositors is that their accounts are insured up to a point. In general, an individual or couple is insured for up to $100,000 for all of their accounts, perhaps more depending on how you hold title to multiple accounts at one institution. But what about accounts owned in the name of a Revocable Living Trust?
The Federal Deposit Insurance Corporation has it’s own rules that pertain to insurance coverage’s for various types of accounts. Their rules for Trusts can sometimes be confusing. We cannot give you any absolute advice on how much insurance is available under FDIC rules. In addition, the FDIC does not generally review individual trusts and tell you how much insurance would be available. What we can do is include here the general rules put out by the FDIC, and give you some questions to pose to your bank for an idea from them on how much insurance is provided. If you cannot get clarification to your satisfaction, you can be absolutely assured of complete protection if you keep no more than $100,000 in the name of your trust in any one bank.
The following information was obtained from the Federal Deposit Insurance Corporation (FDIC) as it relates to Bank and Savings & Loan deposits and how they are insured upon retitling into the name of a trust. [Read more →]