If I have an A-B Revocable Living Trust, will it double the FDIC coverage on our money at the Bank ?

Question

If I have an A-B Revocable Living Trust, will it double the FDIC coverage on our money at the Bank ?

Answer 1

Those answers are close, but wrong.

Insurance on living trusts is considered like this:

# of owners X 100,000 X # of beneficiaries

therefore if a man is the owner, with 3 kids as beneficiaries, he has 300,000 of coverage.

if a man and wife are owners, then you have

2 owners X 100,000 X 3 beneficiaries = 600,000

the important thing here is that the owners receive deposit insurance based on the number of owners on the account. the beneficiaries do not carry their own addition to the coverage, they are simply a multiplier for the amount of coverage the owners receive. note that having 0 beneficiaries listed does not mean 0 coverage, just no multiplier to the coverage. also, having 1 beneficiary would not increase the coverage at all because your multiplier is 1.

each owner on the account gets their 100k of insurance, and gets all the beneficiaries' multipliers. 10 owners and 10 beneficiaries = 10,000,000 of coverage.

this also assumes that all beneficiaries are equal. non- equal splits make it more complicated.

further making it difficult is the fact that if one parent dies, you now have

1 owner X 100,000 x 3 beneficiaries = 300,000 of coverage

the fdic recognizes this and gives a 6 month grace period after an owner dies to restructure the agreement or remove the funds.

also remember that each bank is considered separately by the fdic, so the people in my example hit 600,000 they just have to go across the street and set up a similar trust with that bank.

Answer 2

The account is covered for $100,000 per person per account.

Answer 3

I been researching this myself and have found that FDIC coverage can actually be increased if you have accounts (at the same bank) in different categories of (legally titled) ownership such as: (Single, Joint, Informal "POD" accounts or "In Trust For" accounts and Formal "Living Trusts", certain Retirement accounts, etc).  And in doing so, as long as the qualifications/requirements are met, you can in fact double the amount of FDIC coverage as long as you have your deposits in the different categories of ownership listed in the FDIC literature.

For example: If you have a single account with $100,000,  and a POD (payable on death) or "in Trust For" account to your child with another $100,000 (at same bank),  your FDIC coverage is $100,000 for each account for a total of $200,000 coverage.  Beneficiaries must meet the kinship requirements (aunts, uncles, nieces, nephews, etc. do not count).

EDIT:

"All deposits that an owner has in both informal and formal revocable trusts are added together fot insurance purposes, and the insurance limit is applied to the combined total."

The FDIC literature does not list "AB" living trusts, So I'm not sure about the "AB" part and you would have to call them re this.

However this is stated in writing:  "if a revocable living trust has multiple owners, coverage would be up to $100,000 per qualifying beneficiary for EACH OWNER, provided the beneficiary would be entitled to receive the trust assets when the last owner dies.  If a husband and wife are co-owners of a living trust stating the assets pass to the surviving spouse and upon death of the last owner to their three children equally, the husband has $300,000 insurance AND the wife also has $300,000 insurance, for a total of $600,000 FDIC insurance coverage."

Yes, as long as the conditions/qualifications are met, it is possible to double the amount of FDIC coverage.  Please read over and study the material sourced below for more detailed info.

Hope this helps, mule.

Answer 4

Living Revocable trust accounts at banks are covered differently than other types of accounts.  The coverage is based on primary (qualifying) beneficiaries of the trust.  So, for example, if you and your spouse have 3 kids (who are the beneficiaries on the trust) and $400,000 at the bank in the name of the trust - then the FDIC would insure you up to $300,000 since you have 3 kids (3 kids times $100,000).

Remember the beneficiaries have to be qualifying beneficiaries.  Meaning the beneficiaries must be the owner's kids, grand kids, spouse, parent & or siblings.  All others do NOT qualify for FDIC insurance.

Now, a AB or ABC trust does NOT double your coverage.

Hope that helps,

VP