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Financial Institution Letters


July 2, 2003

TO: CHIEF EXECUTIVE OFFICER (also of interest to Compliance Officer)
SUBJECT: Proposed Rule to Clarify the Regulations on Insuring Living Trust Accounts
Summary: The FDIC is soliciting public comment on two alternative proposed rules governing the insurance coverage of deposit accounts held in connection with living trust accounts.

The Federal Deposit Insurance Corporation (FDIC) is seeking public comment on the attached proposal - containing two alternative rules - to clarify and simplify the FDIC's regulations on the insurance coverage of living trust accounts. The proposal addresses the current confusion surrounding the insurance coverage of living trust accounts. Comments on the proposal are due by August 29, 2003.

The first alternative is to provide coverage up to $100,000 per qualifying beneficiary named in the living trust, regardless of contingencies in the trust. This option would retain the existing parallel treatment between payable-on-death (POD) accounts and living trust accounts by continuing to provide per-qualifying-beneficiary coverage, but no longer requiring that a beneficiary's interest in a living trust be free from conditions.

The second alternative is to create a separate category of coverage for living trust accounts and to insure such accounts up to $100,000 per owner of the account. This deposit insurance coverage would be separate from the coverage afforded to any single-ownership or POD accounts that the owner may have at the same insured depository institution.

Both alternatives would clarify and simplify the rules for insuring living trust accounts. Each proposal, however, would have different consequences for depositors and depository institutions. Therefore, please carefully consider the alternatives and provide any comments you have.

For further information, please contact Joseph A. DiNuzzo, Counsel in the Legal Division, on 202-898-7349; Kathleen G. Nagle, Supervisory Consumer Affairs Specialist in the Division of Supervision and Consumer Protection, on 202-898-6541; or Martin Becker, Senior Receivership Management Specialist in the Division of Resolutions and Receiverships, on 972-761-2196.

For your reference, FDIC Financial Institution Letters may be accessed on the FDIC's Web site at To learn how to automatically receive FDIC Financial Institution Letters through e-mail, please visit

Michael J. Zamorski

Attachment: June 30, 2003, Federal Register, pages 38645-38651
HTML | PDF (60 KB File - PDF Help or Hard Copy)

Distribution: All FDIC-Insured Depository Institutions

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 (1-877-275-3342, option 5, or (703) 562-2200).

Last Updated 07/02/2003

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