FDIC increases insurance coverage and eases trust coverage rules
November, 2008
By
Darin Christensen
A couple months ago, we prepared an eAlert about determining and increasing your FDIC insurance coverage. Since then, several banks have failed, and others are likely to fail over the next year. Three recent developments significantly increase the amount of your potential coverage.
First, the basic amount of coverage per category has increased from $100,000 to $250,000 (the $250,000 limit for certain retirement accounts was not changed). This means that all non-retirement accounts have two and one half times the coverage that they used to carry. For example, a joint account between two people that would have had $200,000 of coverage now has $500,000 in coverage. This increase will last until December 31, 2009, at which time it will revert to $100,000. (FDIC Press Release 93-2008)
Second, the coverage for revocable living trusts has been relaxed and simplified. It used to be that the FDIC had to review the trust, determine how much each of the beneficiaries would receive, and then apply the coverage limits. Now, the FDIC gives $250,000 of coverage per beneficiary for up to five qualified beneficiaries without reviewing the trust agreement (meaning up to $1,250,000 in coverage.) and without regard to the amount each beneficiary would receive. If there is more than $1,250,000 in the trust account, the coverage is the greater of $1,250,000 or the amount of each qualified beneficiary's interest, but capped at $250,000 per beneficiary. Please note: qualified beneficiaries are identified as individuals and charities. Previously, the designation was limited only to certain close relatives. In order to get this benefit, the records of the bank must include the names of the beneficiaries. (FDIC Financial Information Letter 99-2008)
Finally, the FDIC now provides unlimited insurance for non-interest bearing deposits. (FDIC Press Release 100-2008)
If you would like help in determining the amount of your FDIC insurance coverage, or if you have deposits in banks that have been taken over by the FDIC, contact one of the tax lawyers at Bullivant Houser Bailey, PC. We have successfully worked with the FDIC to increase the amount of FDIC insurance coverage provided to clients who were told that part of their deposits were uninsured after the FDIC took over their bank.
For a copy of our prior e Alert click on the following link:
eAlert: Are your bank deposits fully insured by the FDIC?