FDIC Law, Regulations, Related Acts
4000 - Advisory Opinions
Insurance Coverage Afforded Account Held by Attorney Consisting of Settlement Checks Payable to Client and Attorney
February 26, 1991
J. William Via, Jr., Counsel
This responds to your letter of December 27, 1990 regarding insurance coverage for an account held by you (in your capacity as an attorney) which consists of settlement drafts and checks made payable to you and your clients. You refer to the deposit as a trust account; however, we surmise that it is not comprised of funds held pursuant to formal trust agreements, but pursuant to custodial or agency agreements. In order for such an account to qualify for "pass-through" deposit insurance, the deposit account records of the bank must disclose that it is held in a representative capacity (e.g., by an agent, custodian, trustee or nominee) and the records of either the nominal depositor or the bank, maintained in good faith and in the regular course of business, must reveal the ownership interest in the account of each beneficial owner. See 12 C.F.R. §330.4. When these requirements are met, then each beneficial owner will be recognized for deposit insurance purposes in the same manner as if he or she had made a deposit in his or her own name. See C.F.R. §330.6(a). Thus, assuming that this is the only "single ownership account" (see 12 C.F.R. §330.5) that each beneficial owner owns in the institution, the deposit would be insured up to $100,000 per beneficial owner.
In your particular case, some of the funds in the account, from time to time, are owed to you for costs advanced and for services rendered. These funds would be combined for insurance purposes with your other "single ownership accounts" in the same institution, assuming that you are an unincorporated sole practitioner, and uninsured in the aggregate to $100,000. A joint account held by you and your wife in the same institution would be separately insured to $100,000. See C.F.R. §330.7.