4000 - Advisory Opinions
Ownership of Trust Deposits in FDIC-Insured Bank
November 17, 1987
Walter P. Doyle, Counsel
Thank you for your November 10 letter forwarding a copy of The will of John Doe, deceased, which establishes a trust for the benefit of his wife and his son and grandchildren, with the wife and son as co-trustees. While the will does not appear to create an explicit power to revoke the trust, the wife as trustee appears to have unlimited power to remove the son as co-trustee (§ 6.1), and the Trustee does have discretion to determine the amount of trust income to be distributed to the wife (§ 3.2), as well as discretion to invade the trust corpus for the wife's benefit (§ 3.3). Also, the wife has a right to withdraw up to five percent of the trust corpus annually (§ 3.4) and a power to appoint at any time any part of the corpus to descendants of the deceased (§ 3.4a). At the wife's death, thirty percent of anything remaining in the trust would go to deceased's grandchildren and the rest to his son (§ 3.6).
In my opinion, the wife's cumulative powers as trustee and as beneficiary of the trust are tantamount to a power of revocation. Accordingly, she would be regarded as owner of the trust's deposits at an insured bank. Thus, under § 330.3 of our regulations, the interest of each grandchild in Account #2 (i.e., 1 divided by the number of grandchildren and multiplied by thirty percent of Account #2) would be insured to $100,000. The rest of Account #2 (at least seventy percent) would be the son's interest and would be added to Account #1 and insured on a combined basis up to $100,000, separate from any other individual or joint accounts of the wife (mother) or son in the same insured bank.