4000 - Advisory Opinions
Insurance Coverage for Revocable Testamentary Trust Account
October 9, 1987
This is in response to your letter dated September 15, 1987, in which you request clarification of deposit insurance coverage for three savings accounts held in trust for your nephews in the same bank. You appear to be attempting to set up revocable testamentary trust accounts in favor or your nephews.
A revocable testamentary trust account evidences an intention that upon the death of the owner of the account, the funds will pass to the named beneficiary. If the named beneficiary is a spouse, child, or grandchild of the owner, the funds are insured for each owner up to $100,000 per beneficiary, separately from any other accounts of the owner. If the named beneficiary of a testamentary trust account does not meet the required degree of kinship, that account would be added to any individual accounts held by the owner and insured to $100,000.
Because your nephews do not fall within the required degree of kinship, and three savings accounts will be treated as being individually owned and will be added to any other accounts held in your name alone in the bank and insured to $100,000. In order to obtain separate insurance coverage on each savings account, you would have to place the accounts in three different banks.
Testamentary trust accounts are described in question 13 of the enclosed pamphlet, "Your Insured Deposit." I hope this has been responsive to your inquiry.