In light of the turmoil in the banking industry over the past year, we’ve received questions about how much FDIC insurance coverage is available for accounts held in the name of a living trust.
In late 2008, the FDIC coverage was increased to $250,000 per depositor unless you own your account in the name of your living trust. Accounts held in the name of a living trust receive an additional coverage of $250,000 per beneficiary of the trust. Thus, if husband and wife, Bill and Mary, own a bank account in the name of Bill’s living trust which lists both Mary and their two children as beneficiaries upon Bill’s death, then Bill’s trust would be entitled to $750,000 of FDIC coverage (i.e., 3 beneficiaries times $250,000). This extension of coverage is capped, not to exceed $1,125,000. One should also note that the beneficiary must be qualified as an ‘eligible beneficiary.’ To be eligible, a beneficiary must be a person, charity or another non-profit organization (as recognized by the Internal Revenue Service).
The increase in FDIC insurance coverage has been extended through December 31, 2013. Unless further legislation takes place, on January 1, 2014 the amount of FDIC insurance coverage will return to the original amount of $100,000.