Probate, Estate Planning and Trust Law
Law Offices of Alice A. Salvo  Law Offices of Alice A. Salvo
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Phone: 818-676-9572

Is your living trust insured by the FDIC?

If you're like most in Woodland Hills, then you've probably been told at least once in your adult life that you need to start thinking about estate planning. In the world of estate planning, the buzzword that everyone is told to avoid is probate. In order to avoid probate, advisors will often recommend putting your assets into a living trust. Yet this raises the question of whether or not you're insured against the potential failure of the bank holding your trust.

The Federal Deposit Insurance Corporation offers insurance to at least $250,000 per bank for each the checking, savings, or money market accounts, or certificates of deposit that you hold there. Many of the other financial products offered by banks, however, are not covered. These include stocks, bonds, mutual funds, and annuities. FDIC protection for living trusts is available, yet to qualify for special coverage considerations, the trust account must meet all three of the following criteria:

  •          The language of the account title must include terms indicating its purpose, such as "living trust," "payable on death," or "in trust for."  
  •          The beneficiary must be in a position to collect interest on the trust's assets at the time of the bank's failure
  •          The beneficiary must be either a living person, a nonprofit organization, or an IRS-recognized charity

If you’ve named multiple beneficiaries in your trust, their combined interest in the trust is used to determine the amount of deposit insurance coverage.  Should all of the aforementioned criteria be met, the trust owner’s deposits receive as much as $250,000 in coverage for each designated beneficiary. If not, deposits are only insured up to the amount allowed for standard single-ownership accounts. 

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