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Financial Institution Letters

Deposit Insurance Simplification

May 29, 1998


SUBJECT: FDIC Board Simplifies Deposit Insurance Regulations

The FDIC Board of Directors has approved the attached final rule to clarify and simplify the agency's deposit insurance regulations. The final rule takes effect on July 1, 1998.

The final rule contains plainer, more understandable language as well as examples illustrating the rules that govern the most basic types of consumer accounts: single ownership accounts, joint accounts and revocable trust (or "payable-on-death") accounts.

The rule also includes three substantive amendments to the deposit insurance regulations:

The FDIC is granted greater flexibility in determining the actual ownership of accounts held by agents or fiduciaries when the title of the account is indicative of an agency relationship;

Survivors are given a six-month "grace period" to restructure a deposit owner's accounts after the death of the depositor; and

The regulations now specify that a "living trust" account is not entitled to separate insurance coverage as a "payable-on-death" account if the trust agreement provides that the funds might not pass to the beneficiary following the deposit owner's death.

For further information, please contact Christopher Hencke in the FDIC's Legal Division at (202) 898-8839.

William F. Kroener, III
General Counsel

Attachment: Federal Register Vol. 63, No. 90, May 11, 1998, pp. 25750-25764, available at FDIC's Web site, .

Distribution: All Insured Banks and Savings Associations

NOTE: Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 801 17th Street, NW, Room 100, Washington, DC 20434 (800-276-6003 or (703) 562-2200).

Last Updated 07/17/1999

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