Federal Deposit
Insurance Corporation

Re: FDIC Coverage for Living Trust Accounts

Dear Mr. Feldman:

We appreciate the opportunity to comment on the proposed changes regarding FDIC coverage for Living Trust Accounts.

As most everyone would agree, insurance for deposit accounts is very complex and often difficult to understand, not only for customers, but for many bank employees as well. Any steps that can be taken to simplify the insurance rules would benefit all involved.

Alternative One that is proposed would continue to offer more coverage, since it is based on coverage for each beneficiary rather than each owner. However, it appears if this alternative is chosen, the burden placed upon the banks would be significant in that we would be required to review trust documents in detail to determine each beneficiary’s ownership interest in the trust. Potential conflicts could arise if beneficiary changes are subsequently made and the bank is not notified of the change. Additionally, the bank would need to record the information pertaining to beneficiary interest. Would there be a standard format provided by FDIC? Or would banks need to make changes to signature cards to record the beneficiary information? Regardless of the method used, more burden would be placed on banks to record and update beneficiary information for living trusts.

Alternative Two, if chosen, would not require banks to verify beneficiary information. Additionally, if changes were made to the trust agreement, the coverage would not be affected, since it is based on the owner rather than the beneficiaries. However, the amount of coverage under Alternative Two could be significantly less, resulting in customers possibly separating high balance accounts between institutions. Not only would this negatively impact the banks, it would create additional paperwork for the customer to keep up with multiple accounts for one trust.

If I had to choose between the two alternatives as proposed, I would choose Alternative Two. However, because of the potential reduced coverage, I would propose increasing the coverage amount under this alternative.

Thank you again for allowing us to comment on this important change.

Sincerely,
Patty McClure
Asst Vice President
HomeTrust Bank
Asheville, NC