Alert March 04, 2008

FDIC Issues Guide on Deposit Insurance Coverage for Revocable and Irrevocable Trusts

The FDIC issued an extensive guide (the “Guide”) to calculating deposit insurance coverage for revocable and irrevocable trusts.  The Guide discusses FDIC deposit insurance for: informal revocable trust accounts (generally, “payable on death,” “in trust for” or “as trustee for” accounts stating that the funds are payable to one or more beneficiaries upon the death of the owner); formal revocable trusts (written trusts such as living or family trusts created for estate planning purposes); and irrevocable trusts (trusts established by statute or written trust agreement that cannot be terminated or voided by the guarantor).  The Guide provides numerous examples of how to determine the FDIC deposit insurance coverage for each of the foregoing type of trust account.