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FDIC Federal Register Citations

August 27, 2003

Mr. Robert E. Feldman

Executive Secretary

Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

RE: RIN 3064-AC54

Dear Mr. Feldman:

Thank you for the opportunity to comment on the proposed rules clarifying the regulations on insuring living trust accounts. We agree that deposit insurance for living trust accounts is complicated.

We propose implementing Alternative Two when writing the final rule for living trust accounts. Alternative One imposes a huge burden on the bank if it is implemented. The bank would be required to maintain copies of the Trust agreement, determine if each beneficiary is qualified and their interest in the trust, and incorporate changes made to the trust. Tracking the interest of each beneficiary would be complicated and create an additional burden on the bank especially if the share of each beneficiary is different. Each financial institution would have to include the beneficiaries on their Customer Information File system along with the amount each qualifying beneficiary would receive from the trust. Calculating the uninsured portion of deposits for the quarterly Call Report would be difficult without major programming changes to our mainframe system.

Under Alternative Two, we understand that a trust may have a total relationship greater than $100,000 resulting in no insurance coverage if the amount is greater than $100,000. However, these rules are easier to understand for both the customer and the bank employee explaining it. We also agree that the depositor would be able to make an informed decision in determining the maximum insurance coverage for their living trust account.

The procedural requirements for Alternative Two would only require the bank to document the existence of the trust, something that is required through the Customer Information Program (CIP) that becomes effective October 1, 2003. Also, if Alternative Two is approved, we propose that customers be notified of the change and given a time period such as six months to decide if they will leave the funds where they are or reallocate them to improve their FDIC insurance coverage.

Thank you for considering these comments.

Yours truly,

Peggy Voorheis
Consumer Compliance Officer
South Bend, IN

Last Updated 08/29/2003

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