Answer:
Answer by Brian Crow: FDIC inusrance for trust accounts is based on the beneficiaries, and whether or not they are "qualified beneficiaries." Who the trustees are has no bearing on coverage. Also bankers should refrain from quoting coverage as the bank could find itself liabile if coverage is misquoted. For customers with questions regarding coverage, direct them to the FDIC Electronic Deposit Insurance Estimator (EDIE).
Answer:
Answer by Sonja Kriegsmann: This sounds like a formal revocable trust where your customers have a formal trust agreement. For revocable trust accounts, the key to determining FDIC insurance coverage is the beneficiaries named, rather than the trustees or successor trustees.
The account must also meet certain requirements. It must be identified as a trust account. The beneficiaries must be "qualified" beneficiaries, or the amount of FDIC insurance coverage will be impacted. Qualified beneficiaries are individuals, charities and non-profit organizations. And the beneficiaries must be named in the formal trust agreement.
If all of these conditions are met, the FDIC insurance coverage is calculated by multiplying the $250,000 coverage times the number of beneficiaries. Separate calculations would be done for each trust account.
If there are more than 5 qualified beneficiaries, the calculation can be more complex depending on the interest each beneficiary has in the trust. For details on this calculations and other details on the FDIC insurance coverage for a revocable trust, the FDIC "Your Insured Deposits" brochure is a very helpful tool. It can be found at this link.
First published on BankersOnline.com 6/10/13
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