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Each depositor insured to at least $250,000 per insured bank

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FDIC Federal Register Citations

From: Oren Goldberg
Sent: Monday, October 06, 2008 4:48 PM
To: Comments
Subject: Revocable Trust Accounts

I commend those concerned for these interim rules.  In response to the request for comments, I submit the following:

(1)     I believe “over $500,000” is a fine threshold for determining coverage for revocable trust account owners based on the beneficial interests of the beneficiaries; however, I believe that this portion of the interim rules is not well written and will result in additional confusion.  It was not until I had read the interim rule and revised regulations a few times that I understood what was meant by “the aggregate amount of all the beneficiaries’ interests in the trust(s), limited to $100,000 per beneficiary.”  The examples are helpful in showing how in some cases a portion of the assets will remain uninsured while in other cases the FDIC will provide insurance in excess of $500,000; however, I believe the plan language should be clarified.

(2)     The interim rule that revocable trusts that become irrevocable on the death of a settlor will continue to be insured under the revocable trust rules is a welcome change.  I do believe the irrevocable trust account rules should be revised so that all trusts are covered by substantially the same rules.

Finally, a question that I hope can be answered in the coming days: As of October 3, the coverage limits have been increased to $250,000.  How does this affect the overall calculation, particularly with regard to revocable trusts with more than $500,000 and more than five beneficiaries and irrevocable trusts in general?  This particular question has come up repeatedly in recent days at the increased limits provide comfort to depositors, but also increased complexity in light of the interim (and prior) rules.

Oren Goldberg
Bethesda, Maryland

Last Updated 10/08/2008

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