August 27, 2003
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
RE: RIN 3064-AC54
Dear Mr. Feldman:
Thank you for the opportunity to comment on the proposed rules
clarifying the regulations on insuring living trust accounts. We agree
that deposit insurance for living trust accounts is complicated.
We propose implementing Alternative Two when writing the final rule
for living trust accounts. Alternative One imposes a huge burden on the
bank if it is implemented. The bank would be required to maintain copies
of the Trust agreement, determine if each beneficiary is qualified and
their interest in the trust, and incorporate changes made to the trust.
Tracking the interest of each beneficiary would be complicated and
create an additional burden on the bank especially if the share of each
beneficiary is different. Each financial institution would have to
include the beneficiaries on their Customer Information File system
along with the amount each qualifying beneficiary would receive from the
trust. Calculating the uninsured portion of deposits for the quarterly
Call Report would be difficult without major programming changes to our
mainframe system.
Under Alternative Two, we understand that a trust may have a total
relationship greater than $100,000 resulting in no insurance coverage if
the amount is greater than $100,000. However, these rules are easier to
understand for both the customer and the bank employee explaining it. We
also agree that the depositor would be able to make an informed decision
in determining the maximum insurance coverage for their living trust
account.
The procedural requirements for Alternative Two would only require
the bank to document the existence of the trust, something that is
required through the Customer Information Program (CIP) that becomes
effective October 1, 2003. Also, if Alternative Two is approved, we
propose that customers be notified of the change and given a time period
such as six months to decide if they will leave the funds where they are
or reallocate them to improve their FDIC insurance coverage.
Thank you for considering these comments.
Yours truly,
1st SOURCE BANK
Peggy Voorheis
Consumer Compliance Officer
South Bend, IN
