FDIC and Revocable Living Trust 

How is a revocable living trust treated for FDIC insurance purposes?

Effective April 1, 2004 the owner of a living trust account will be insured up to $100,000 per beneficiary if all of the following requirements are met:

• The beneficiary must be the owner's spouse, child, grandchild, parent or sibling,
• The beneficiary must become entitled to his or her interest in the trust when the owner dies, and
• The account title at the bank must indicate the account is held by a living trust.

Example: A father has a living trust leaving all trust assets equally to his three children. This trust 's account would be insured up to $300,000 since there are three qualifying beneficiaries who would become owners of the trust assets when the owner dies.

If a living trust has more than one owner, coverage would be up to $100,000 per qualifying beneficiary.

Example; A husband and wife are co-owners of a living trust. The trust provides that upon the death of the last owner the funds will pass to their three children equally. This trust 's deposit account would be insured up to $600,000.

The trust interest of a non-qualifying beneficiary (not the owner's spouse, child, grandchild, parent or sibling) is included in any coverage that the owner is eligible for at that same bank.

For more information see New Rules for Revocable Living Trusts on the FDIC web site.