FDIC Insurance Clarity

User Forum Topic
Submitted by Coronita on October 5, 2007 - 5:31am

  With the recent concerns about banks, I thought it might be prudent to review what FDIC really covers and doesn't cover. Here at piggington, folks have said well it's insured up to $100k per institution ($250k for retirements) Over which it's not insured.Talking to a few relatives and reading about FDIC, it seems like there are additional details, as follows. Anyone really knowledgeable, I would appreciate confirmation of these the following and/or correction.----

 

1)Single Accounts: (meaning account(s) held in your name alone or in a sole proprietorship, or established for a descendants estate

Total combined insurance for all "single accounts" at a institution is $100k.

 

2)Retirement Accounts: Total combined insurance for all "retirement accounts" at a institution is $250k. These are a seperate category from #1. So, i believe if you have $100k in single accounts and $250k in a retirement, everything is still covered.

 

3) Joint Accounts: Each co-owner of each joint account is eligible for $100k insurance out of all the joint accounts he/she is part of...

If i read that correctly, this means you can have up to $100k in single accounts, and $100k in joint accounts.

 

4) Revocable Living Trust Account:

The rules that cover this are pretty complicated, as insurance coverage is based on trust owner and qualifying beneficiaries, and how the trust is write to distribute to beneficiaries. However, most pertinent to most family living trusts is in Rule #5 and #6. Generally, it's $100k per trust owner and per qualifying beneficiary.

 

  • If a living trust has multiple owners, coverage would be up to $100,000 per qualifying beneficiary for each owner, provided the beneficiary would be entitled to receive the trust assets when the last owner dies.

    For example:
    A husband and wife are co-owners of a living trust. The trust states that upon the death of one spouse the assets will pass to the surviving spouse, and upon the death of the last owner the assets will pass to their three children equally. This trust's deposit account would be insured up to $600,000. Since each owner names three qualifying beneficiaries, the owners (husband and wife) will be insured up to $300,000 each.

  • If any of the requirements for insurance coverage under the revocable trust account category are not met:

    The entire amount in the account, or any portion of the account that does not qualify, would be added to the owner's other single accounts, if any, at the same insured bank and insured up to $100,000.

    If the revocable trust account has more than one owner, the FDIC would insure each owner's share as his or her single account.

    For example:
    David Stein has a living trust naming his son and nephew as equal beneficiaries of all trust assets. In this case, the trust has one qualifying beneficiary (the son) and one non-qualifying beneficiary (the nephew). Since one of the requirements for insurance coverage under the revocable trust account category is not met for one beneficiary -- that is, one beneficiary is not qualifying - only the portion of David's trust deposits attributable to his son qualifies for insurance coverage as a revocable trust account. The portion of the trust deposits attributable to David's nephew is insured as David's single ownership account.

    If David has no other revocable trust accounts at the same bank that name his son as a beneficiary, the portion of the trust account attributable to his son would be insured up to $100,000 in the revocable trust account category. If David has no other single accounts at the same bank, the portion of the trust account attributable to his nephew would be insured up to $100,000 as David's single ownership account. Thus, this trust account could be insured up to $200,000 through a combination of coverage in the single ownership account and revocable trust account categories.

     

    Complete insurance policy http://www.fdic.gov/deposit/deposits/insured/ownership4.html#revocable 

  • Submitted by Coronita on October 5, 2007 - 5:34am.

    Forgot to mention there are other account types, which aren't of concern to me. Namely Irrevocable Trusts, employee benefit plan, corp, government accounts.

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