Are Irrevocable Trusts Covered by FDIC Deposit Insurance?

by Mary Beth Guard
Guru BIOS

Question: Are irrevocable trusts covered by FDIC deposit insurance the same way revocable trusts are covered?

Answer: No, the two types of trust are not covered the same way by insurance. Revocable trusts are insured on a per beneficiary basis up to $100,000 per qualified beneficiary.

Irrevocable trusts, on the other hand, do not have to have "qualified" beneficiaries. Under the provisions of Section 330.13 of the deposit insurance regulations, funds representing the non-contingent trust interest of a beneficiary under an irrevocable trust will be insured up to $100,000 per non-contingent beneficiary and there is no requirement for any particular family relationship. A beneficiary can even be an entity, such as a corporation.

The original version appeared in the June 2004 edition of the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com 1/24/05