FDIC Federal Register Citations

To: Comments

Subject: FDIC Coverage of Deposits for Revocable Trusts

I am writing to comment on your proposal to clarify the regulations on insuring living trust accounts. Specifically, I recommend that you approve Alternative #1.

I work with clients every day on creating and maintaining estate plans for their individual circumstances. A revocable living trust is a very powerful tool in estate planning, as clients benefit from probate avoidance, management of their affairs in the event of their incompetence, and management of their trust estate at death, just to name a few. Because of these benefits, it is normally desirable for a client to place all of their assets into their revocable living trust during their lifetime. This is where the FDIC coverage issue comes into play.

Many clients, unfortunately, do not want to place all of their bank deposits into their revocable living trust due to confusion regarding how much FDIC coverage they would then have. Rather, they insist on maintaining separate, individually-titled, bank accounts in order to try to “leverage” their FDIC coverage. This practice then causes estate-planning problems, as all the clients assets are no longer centralized in their revocable living trust. This leave many elderly clients trying to “juggle” the planning aspects of having some assets in their individual name and some owned by their trust, not knowing exactly which is which and often forgetting to title accounts correctly when a certificate maturity notice arrives requiring them to open another certificate.

I firmly believe it would be beneficial to implement Alternative #1 to assist clients, specifically the elderly, in being able to simplify their estate planning and still qualify for FDIC coverage of a more sizeable portion of their trust estate.

Please do not hesitate to call me if I can be of assistance in clarifying any of my thoughts. Thank you for the opportunity to comment.

Sincerely,

Greg A. Salmen, CFA, CTFA
Sr. Vice President & Trust Manager
The Stephenson National Bank & Trust
1820 Hall Avenue, Marinette, WI 54143