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4000 - Advisory Opinions

Insurance Coverage for Individual Trust Interests in a Commingled Account


January 4, 1988

Gerald J. Gervino, Senior Attorney

In your letter of December 1, 1987 you ask about our deposit insurance limitations on a "common" account with commingled funds belonging to several trust accounts for which the bank is acting as trustee. The bank would take uninvested cash in various accounts of which it is trustee and invest them in this "common account" in order to earn interest prior to distribution of the funds to beneficiaries of the trust or permanent investment of the trust's funds. The account will be designated as a "Trust Money Market". The ascertainable interest of each individual trust will be reflected at all times by the trust department records.

Under § 331-1(b) of our regulations, where trust funds of a particular trust estate are mingled with trust funds of other estates and deposited by the fiduciary bank in a bank account without allocation of specific amounts from the particular trust estate to an account in the bank, the deposit with respect to that estate in any closed insured bank will be the amount which will bear the same ratio to all unallocated funds of the estate for which the fiduciary is accountable as the entire unallocated trust funds to the credit of the fiduciary bank in the closed insured bank will bear to the entire amount of funds so deposited by the fiduciary in all depositories. Section 331.1(d) limits the total insurance to $100,000 for each trust estate.

Thus, under the circumstances you have outlined above, each trust interest in the commingled account you have described would be separately insured.

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