Oct 12, 2008

FDIC Insurance for Trust Accounts Increased to 250K

Another reason to create a living trust: did you know that bank accounts owned by living trusts can get more FDIC insurance than accounts owned by individuals? It's true. Trust accounts get the maximum FDIC insurance for every qualified beneficiary.

The FDIC now insures qualifying beneficiaries for $250,000 each, at least until December 31, 2009, when the financial bail-out package expires. A qualifying beneficiary is a spouse, child, grandchild, parent, or sibling of the account owner. The account must be owned by the living trust.

Here's how it works:

If a single mom sets up a living trust, naming her two children as the beneficiaries after she dies, the bank account owned by the trust is insured up to $500,000: 2 beneficiaries at $250,000 each.

If a husband and a wife set up a living trust and their three children will be the beneficiaries after they both die, the trust account is ensured for up to $1,500,000: $250,000 for each beneficiary for each owner, or 250,000 x 6.

These FDIC limits are per bank not per account. If a trust owner has more than one account at the same bank, these limits apply to all their accounts there.