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FDIC Federal Register Citations

via email

Jim Meredith
Sent: Thursday, August 28, 2003 3:38 PM
To: Comments
Subject: Deposit Insurance Regulations; Living Trust Accounts

August 28, 2003                   

Mr. Robert E. Feldman, Executive Secretary
Attention:  Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, D.C. 20429

Re:       Deposit Insurance Regulations; Living Trust Accounts 68 FR 38645 (June 30, 2003) 

Dear Mr. Feldman:

The Operations & Technology Committee of the New Jersey League of Community Bankers
* is pleased to comment on the Federal Deposit Insurance Corporation proposal to clarify and simplify its regulations on the insurance coverage of living trust accounts.   

The committee applauds the effort to simplify deposit insurance rules and generally supports the first alternative, which would provide up to $100,000 of coverage per qualifying beneficiary named in the living trust irrespective of any defeating contingencies that the trust may contain.  As has been noted by America's Community Bankers, we also have a concern that the proposal would require an institution to "certify" the existence of a living trust when a depositor opens a living trust account. 

 Our concern is that the term "certification" could be interpreted to require bank personnel to render an implicit legal opinion as to the trust's validity, which is beyond the capacity of many accounts representatives of community banks. Also, bank certification could be rendered meaningless at any subsequent time since living trusts are revocable during the grantor's lifetime. Imposition of a certification requirement would also significantly impact an institution's operating procedures by requiring the recording of additional levels of detail that may not be of material interest to the bank. 

 We believe that requiring insured depository institutions to maintain a trustee's or grantors contact information would be more appropriate than the proposed certification requirement. In the event that institutions are required to retain detailed beneficiary information, we would strongly encourage the FDIC to develop a model form that would place the burden of recording accurate beneficiary information on the grantor or the trustee.  The grantor would complete the form and certify its accuracy. 

We appreciate the opportunity to provide these comments on this proposal.

James M. Meredith
Senior Vice President

 * The New Jersey League of Community Bankers is a trade association representing 75 of New Jersey's savings banks, savings & loan associations and commercial banks with total assets of over $50 billion.  The League's wholly-owned subsidiary, the Thrift Institutions Community Investment Corporation ("T.I.C.I.C.") assists League members in forming consortia to make loans on low-to-moderate income housing projects.  T.I.C.I.C. has facilitated loans on over 3,600 affordable housing units throughout New Jersey and has loans in process on nearly 1,700 more housing units.

Last Updated 09/05/2003

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