FDIC Insurance for California’s Living Trust Beneficiaries
Wow, the banks have been getting hit hard again in the stock market. It’s hard to believe that you can buy a share of Citigroup and a share of Bank of America for a less than 10 bucks. I don’t know about you, but it doesn’t give me a lot of comfort with our banking system. Putting what’s left under the mattress is starting to look like a reasonable alternative.
In the short term, the financial bailout plan signed into law in October benefits persons who have trusts, because bank accounts owned by Living Trusts can get more FDIC insurance than accounts owned by individuals. Living Trust accounts get the maximum FDIC insurance for every qualified beneficiary.
Until December 31, 2009, when the financial bail-out package expires, the FDIC now insures “qualifying beneficiaries” for $250,000 each. A qualifying beneficiary is a spouse, child, grandchild, parent, or sibling of the account owner. The account must be owned creators or grantors of the living trust.
Here is how it works:
A single parent in Orange County sets up a living trust naming her two children as the beneficiaries after he or she dies, the bank account owned by the trust is insured up to $500,000: 2 beneficiaries at $250,000 each.
If you and your spouse and I set up a living trust and all three of your children are the beneficiaries after you both die, the trust account is ensured for up to $1,500,000. $250,000 for each (child) beneficiary and for each owner. (3 beneficiaries x $250,000 x 2 owners = 1,500,000).
These FDIC limits are per bank not per bank account at the same bank. If a California living trust owner has more than one account at the same bank, these limits apply to all their accounts there.
Be sure and confirm this with your banker in writing and avoid relying on any other informal sources. You can get some help with this handy calculator on the FDIC website.
Tags: Estate Planning
