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Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Winter 2003/2004

New Insurance Rules for Living Trusts
The FDIC recently adopted new rules that simplify the insurance coverage of deposits held by living trusts (see Living Trust Accounts). The new rules, which take effect on April 1, 2004, are simpler than the existing rules and help depositors and bankers determine insurance coverage more easily.

Under the new rules, the FDIC will provide insurance coverage for payable-on-death (see Payable-on-Death Accounts) and living trust accounts combined for up to $100,000 for each qualifying beneficiary even if the living trust contains conditions on the inheritance, such as a requirement that a beneficiary must graduate from college before receiving any money. This is an important change because the old FDIC rules imposed limits on the insurance coverage if the trust contained such conditions, and that distinction was a source of confusion for both consumers and bankers. "This simplification of the rules will make it much more likely that families with living trust accounts will be fully protected by the FDIC if their bank fails," says FDIC Chairman Don Powell.

In addition, Martin Becker, a senior official in the FDIC division that handles bank failures, says that "the new rules should speed up deposit insurance determinations on living trusts and, therefore, enable these depositors to obtain their insured funds more quickly."

The new rules also eliminate a previous requirement that beneficiaries of living trust accounts be named in the bank's records. This means that banks no longer have to keep copies of the depositor's living trust document. However, the account title must indicate that the funds are held by a living trust.

For more information, go to the FDIC Web site or contact the FDIC. For example, the FDIC has issued a fact sheet with examples of how different kinds of living trust accounts would be insured under the new rules (available at www.fdic.gov/news/news/financial/2004/fil1404b.html).

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Last Updated 03/09/2004 communications@fdic.gov