FDIC Federal Register Citations

From: John Rosino
Sent: Sunday, September 28, 2008 11:48 AM
To: Comments; John E. Rosino
Subject: Revocable Trusts

Ladies and Gentlemen:

First, I would like to state that I am unequivocably in favor of the intended simplification of the revocable trust rules which you are now proposing.

I do have a comment to address regarding the proposed new regulations issued on September 26, 2008.  The past and current rules regarding "payable on death" ("POD") accounts which fall under this category seem to still require that beneficiaries be named to receive an additional $100,000 of FDIC coverage.  However, for the convenience of the depositor many POD accounts name a revocable trust as the named beneficiary.  For example, this would often be done because it would allow the account owner's financial power of attorney holder to act on his or her behalf in the event of the account owner's temporary disability or other situations for which the account owner could not properly utilize the account for a period of time.  If the account is held directly by a revocable trust for which the account holder is often the sole trustee the account holder would have to resign as trustee and name a new trustee so that there would be appropriate access to the account. 

Although I hope that POD accounts naming a revocable trust as beneficiary would be treated under the FDIC regulations in the same way as if they were initially titled to the revocable trust, the regulations do not seem to specifically address this common practice of naming a revocable trusts as the beneficiary of a POD account and therefore the regulations are not clear as to how this arrangement would be treated.  Would it be treated as just one $100,000 beneficiary or would the revocable trust POD beneficiary then fall under the new revocable trust rules just as if the revocable trust was the initial owner of the account?  I strongly recommend that this be clarified in the regulations in order that banks and depositors can properly anticipate the coverage and make any changes necessary.  Perhaps a specific example could be added to the final regulations which would clarify the treatment of this common practice.

Thank you for taking the time to consider this comment.

John E. Rosino
Sandusky, Ohio