FDIC Federal Register Citations

From: Bob Ridgway 
Sent: Tuesday, September 30, 2008 9:16 AM
To: Comments
Subject: Revocable Trust Accounts

This is a comment on the amendments to 12 CFR 330 adopted by the FDIC Board September 26, 2008

My comment is that while the prior rules and explanation (including specifically footnote 7) seem to say that for "formal" trusts, the indication on the account that the trust is a "living" trust is sufficient to establish coverage for the beneficiaries "named" in the trust, Sections 330.10(a) and (b) read together seem to require language identifying the beneficiaries in the "title of the account." Paragraph (b) says:
 "The required intention in paragraph (a) of this section that upon the owner's death the funds shall belong to one or more beneficiaries must be manifested in the title of the account using commonly accepted terms such as, but not limited to, in trust for, as trustee for, payable-on-death to, or any acronym therefore. On the other hand, informal trusts require the specific names of the beneficiaries in the account". Paragraph (a) says that coverage  will be, "...in an amount equal to the total number of different beneficiaries named in the account(s) multiplied by the SMIDA." Under a strict reading of the revised section, an account entitled: "John Doe and Mary Doe, as trustees of the John Doe Living Trust dated September 26, 2008" would be insufficient because it fails to name any beneficiaries in the "account"
or "title of the account." 

My suggestion would be to amend paragraph (a) to read: "Except as provided in paragraph (e) of this section, the funds owned by an individual and deposited into one or more accounts with respect to which the owner evidences an intention that upon his or her death the funds shall belong to one or more beneficiaries shall be separately insured (from other types of accounts the owner has at the same insured depository institution) in an amount equal to the total number of different beneficiaries named in the account (for informal trusts) or to the total number of different beneficiaries named in the trust (for formal trusts) multiplied by the SMDIA." AND 

To amend paragraph (b) to add, "Accounts held in the name of a trustee of a living trust, revocable trust or revocable living trust shall satisfy the required intention provision of paragraph (a), without specifically naming the trust's beneficiaries." 

Bob Ridgway
Ridgway & Ridgway, LLP
Attorneys and Counselors At Law
P. O. Box 710, 93 Chandler Center
Hartwell, GA 30643