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Our legal department has received numerous questions regarding recent changes in FDIC deposit insurance. What follows is a brief recap, along with applicable links, for information and registration information for a free FDIC telephone seminar. We hope you find this information to be timely and helpful.
Temporary increase in deposit insurance coverage
A temporary increase in deposit insurance coverage to $250,000 became effective on October 3, 2008. The basic deposit insurance limit will return to $100,000 on December 31, 2009. See FIL-102-2008. The FDIC provides separate insurance coverage for deposits held in different ownership categories such as single accounts, joint accounts, IRAs, and trust accounts.
Highlights include:
- Insured institutions may post the following statement, or affix a sticker with the above statement, next to the official FDIC sign (teller station sign). Banks may use their own materials in any format for this purpose, or order stickers with this language using the procedures on the FDIC's Web site:
On October 3, 2008, FDIC deposit insurance temporarily increased from $100,000 to $250,000 per depositor through December 31, 2009.
- Attached to the FIL is a one-page documentthat provides an overview of insurance coverage, reflecting the temporary $250,000 insurance limit. You may display this document in branch offices to help explain insurance coverage to depositors.
FDIC simplifies coverage rules for revocable trust accounts
updated 10/8/08
The FDIC has adopted an interim regulation simplifying the rules for insuring revocable trust accounts - commonly known as payable-on-death accounts and living trust accounts. The new rules are easier to understand and apply, and provide at least as much coverage as the former rules for revocable trust accounts. The revised rules take effect today and apply to all existing and future revocable trust accounts at FDIC-insured institutions. The FDIC welcomes comments on the interim rule for 60 days after its publication in the Federal Register.
Highlights:
Under the interim rule:
- The concept of "qualifying" beneficiaries based on certain family relationships has been eliminated.
- For each account owner with combined revocable trust deposit balances of $1.25 million or less at a single bank, the maximum coverage will be determined by multiplying the number of different beneficiaries by $250,000. (This will apply to the vast majority of revocable trust accounts.)
- For each account owner with combined revocable trust deposit balances of more than $1.25 million and more than five named beneficiaries, coverage is the greater of $1.25 million or, as before, the aggregate of all beneficiaries' proportional interests in the trust deposits, limited to $250,000 per beneficiary.
- In determining coverage for living trust accounts, a life estate interest is valued at $250,000.
- Irrevocable trusts that spring from a revocable trust upon the death of the revocable trust owner will continue to be insured under the revocable trust rules.
FDIC deposit insurance coverage resources
You can find FDIC deposit insurance coverage resources by clicking hereor at http://www.fdic.gov/deposit/index.html
There’s still time to register for one of five remaining FDIC free deposit insurance telephone seminars
The remaining seminars on the FDIC rules for deposit insurance coverage are on October 10, 14, 22, and 28 and November 4. Each seminar runs approximately two to three hours. Advance registration is required for each session. Instructions for registering can be found hereor on pages 2 and 3 of FDIC FIL-85-2008. The FDIC is encouraging attendees to download the presentation prior to attending, which is available in both PowerPointand Acrobat Reader(PDF) formats.
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