FDIC Insurance for Trust Bank Accounts  

The Federal Deposit Insurance Corporation (FDIC) insures bank accounts in the event of a bank failure.  If you have more than the FDIC limit at a bank that fails, you could lose all or part of the amount that is not covered by the FDIC insurance. 
 

Coverage for living trust accounts. Living trust accounts for each trust owner are insured up to $250,000 (subject to some limitations) per beneficiary, regardless of whether the beneficiary is a close relative of the trustor.  This is a change from previous FDIC rules which stated that the beneficiaries had to be the account owner's spouse, child, grandchild, parent, brother, or sister.

The amount of coverage is determined by the number of beneficiaries per trust owner, whether they are individuals, charities, or some other type of non-profit corporation, times $250,000 for each beneficiary.  However, there is a limit of $1,250,000 per bank for each account owner.

This web page applies solely to bank accounts covered by FDIC insurance.  Note that FDIC insurance does not apply to brokerage accounts or mutual funds.

 

Examples:

1.  Husband and wife have two children, who are the only beneficiaries of their trust.  Up to $1,000,000 will be insured at each bank for the accounts titled in the trust.  Husband has $500,000 of coverage and wife has $500,000 of coverage.  This is calculated by multiplying $250,000 times 2 beneficiaries for each account owner. 

2.  Husband and wife have no children, and their niece and nephew are the only beneficiaries.  Up to $1,000,000 will be insured at each bank for the accounts titled in the trust. 

3.  A single person has a trust with his two children as the only beneficiaries.  Up to $500,000 will be insured at each bank for the accounts titled in the trust.

4.  Husband and wife have listed five charities as the beneficiaries of their trust.  The FDIC coverage will be a total of $1,250,000 for each account owner, or a total of $2,500,000.

5.  A single person has a trust in which the beneficiaries are the trustor's three children and one charity.  The FDIC coverage is $1,000,000.

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