If you’re like most in Woodland Hills or another California city, then you have probably been told at least once in your adult life the 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. This raises the question of whether or not you are 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:
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.