Trust Updates Archive
FDIC—New Rules Expand Coverage for Trusts
(January 13, 2004, CHICAGO, IL)--The FDIC Board of Directors
voted today to expand insurance coverage for deposits held in living trusts
and eliminate the requirement that beneficiaries be named in the records
of the bank.
Under existing coverage, “qualifying” beneficiaries, not subject to
a “defeating contingency,” are eligible for FDIC insurance coverage. Qualifying
beneficiary is defined as a grantor’s spouse, children, grandchildren,
parents, and siblings. A “defeating contingency” is a condition which must
be met prior to receiving any benefits under the trust, such as having
attained a certain age or having graduated from college. Under the revised
rule, "qualifying" beneficiary includes all “qualifying” beneficiaries
regardless of defeating contingencies. The revised rule also eliminates
the existing requirement that beneficiaries of living trust accounts be
named in the records of the depository institution.
The new rules become effective April 1, 2004. However, the FDIC says
it will apply the new rules if an insured institution fails prior to April
1 and if doing so would benefit the affected depositors. In general, the
FDIC defines a living trust as a revocable trust that enables the owner
(or grantor) to retain full control over the assets and the designation
of beneficiaries during the owner's lifetime.
--Copyright ©2004 A.M. Publishing, Inc., Trust Regulatory News
No statement in this issue is offered as or should