The ABC’s of FDIC – Insurance for Living Trusts
The FDIC –short for the Federal Deposit Insurance Corporation – is an independent agency of the United States government. The FDIC protects depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails. FDIC insurance is backed by the full faith and credit of the United States government. REMEMBER, no matter how secure looking your bank building appears, the safety of your accounts depends on which of the bank’s products you decide to use and whether the bank is FDIC insured. Go to the FDIC website where you can enter the name of your bank and determine if it is FDIC insured.
What Is Insured?
You are probably familiar with the traditional types of bank accounts – checking, savings, trust, certificates of deposit (CDs), and IRA retirement accounts – that are insured by the FDIC. Banks also may offer what is called a money market deposit account, which earns interest at a rate set by the bank and usually limits the customer to a certain number of transactions within a stated time period. All of these types of accounts generally are currently insured by the FDIC up to the legal limit and sometimes even more for special kinds of accounts or ownership categories.
Effective October 3, 2008, the basic limit on federal deposit insurance coverage was temporarily increased from $100,000 to $250,000 per depositor through December 31, 2009. In mid 2009, President Obama signed a bill that postponed the expiration date of the increased FDIC insurance limits on most bank deposit accounts. Under the new law, the standard FDIC insurance limit of $250,000 dollars per depositor will continue until December 31, 2013. This new law also applies to accounts at federally insured credit unions under the National Credit Union Share Insurance Fund.
Keep in mind that this new law does not change or extend the coverage applicable to IRAs and other certain retirement accounts. Those accounts will continue to be covered beyond December 31, 2013 for up to $250,000 dollars per owner as they have been before any of the limits changed in 2008.
Also, non-interest bearing accounts such as traditional checking accounts, currently have unlimited FDIC insurance coverage based on the legislative changes made in 2008 in response to the financial crisis. This unlimited coverage is still set to expire at the end of this year. The bill discussed above does not change or extend the unlimited coverage for those accounts.
This chart summarizes the current status of FDIC insured accounts:
|FDIC Deposit Insurance Coverage Limits (Through December 31, 2013)|
|Single Accounts (owned by one person)||$250,000 per owner|
|Joint Accounts (two or more persons)||$250,000 per co-owner|
|Certain Retirement Accounts (includes IRAs)||$250,000 per owner|
|Revocable Trust Accounts||$250,000 per owner per beneficiary up to 5 beneficiaries (more coverage is available with 6 or more beneficiaries subject to specific limitations and requirements)|
|Corporation, Partnership and Unincorporated Association Accounts||$250,000 per corporation, partnership or unincorporated association|
|Irrevocable Trust Accounts||$250,000 for the non-contingent, ascertainable interest of each beneficiary|
|Employee Benefit Plan Accounts||$250,000 for the non-contingent, ascertainable interest of each plan participant|
|Government Accounts||$250,000 per official custodian|
Here is what the FDIC has to say about determining the extent of FDIC insurance coverage for living trusts.
We hope this article will assist you in making deposit decisions at your local bank, credit union or savings and loan. The FDIC website is a great source for additional information on your accounts.
If you want to learn more on insurance for Living Trusts contact us at:
2070 Pioneer Court
San Mateo, CA 94403
McDowall Cotter provides comprehensive legal services in three areas of practice: civil litigation; business; and wealth preservation. To learn more visit us at http://www.mcdlawyers.net. We are a San Mateo based law firm and for more than 50 years, McDowall Cotter’s chief objective has been to deliver exemplary legal services that are personalized, effective and efficient.