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4000 - Advisory Opinions

Insurance of Revocable Trust Accounts In Insured Institutions in Louisiana


August 15, 1990

Roger A. Hood, Assistant General Counsel

Your letter dated July 24, 1990, to the FDIC regional attorney in Memphis, Tennessee, has been referred to my office for review. In that letter, you request an opinion regarding FDIC deposit insurance coverage for revocable trust or "payable on death" accounts in insured institutions in Louisiana.

With respect to your request, you state that Louisiana law does not recognize either common-law "Totten" or similar revocable trusts or the effect of "payable on death" language, standing alone, to transfer ownership of the deposited funds to the designated beneficiary. You inquire as to whether, despite their ineffectiveness for this purpose under state law, the FDIC will provide separate coverage for such accounts under 12 C.F.R. §330.3.

As you are probably aware, former 12 C.F.R. §330.3 has now been superseded by 12 C.F.R. §330.8. Application of §330.8 by the FDIC is not affected by whether state law recognizes the effectiveness of such accounts to transfer ownership of the deposited funds. Thus, if §330.8 is otherwise applicable, it is not made inapplicable by the elements of Louisiana law to which you refer. This was the FDIC's policy under the former §330.3 and has not changed under the new deposit insurance regulations that began to take effect on July 29, 1990.

I trust this information is responsive to your request. Should you have additional questions concerning this matter, you may address them either to the federal attorney or to my office.

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