FDIC Modifies Deposit Rules for Trusts
On January 21, 2022, the federal deposit insurance corporation (the “FDIC”) approved a final rule to amend the deposit insurance regulations for bank accounts for trusts. Under the current rules, revocable trusts and irrevocable trusts are treated differently. Under the new rules, revocable trusts and irrevocable trusts will be subject to the same set of rules. Under the new rules, trust deposits at each bank will be insured in an amount up to $250,000 for each trust beneficiary for up to five beneficiaries. Only beneficiaries who are “primary” beneficiaries are counted for purposes of calculating the coverage. Beneficiaries who only obtain a beneficial interest in the trust if one or more of the primary beneficiaries are deceased do not count in determining the coverage. All trusts created by a grantor at a financial institution are aggregated. Thus, the maximum coverage at each financial institution for all trusts created by a grantor is $1,250,000. If a trust has more than one grantor, than, unless otherwise stated in the financial institution’s deposit account records, a deposit of such trust is presumed to be owned by the grantors in equal shares. The new rules will take effect April 1, 2024. According to the FDIC, the effective date provides depositors and insured depository institutions time to prepare for the changes in coverage. The FDIC has also released a fact sheet on the final rule.