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Revocable Trust Accounts: $ 250,000 per owner per beneficiary
Anyone here able to tell me (hopefully in English) what that actually means? FWIW, our RTA accounts are in my wife's name and my name, with of course the survivor being the beneficiary. We have three accounts at a particular bank, and I'm trying to figure out what our max FDIC "promise-to-print-paper" is.
FDIC insurance limits apply separately to each of eight categories (single owner accounts, joint accounts, retirement accounts, revocable trusts, irrevocable trusts, etc.). So the fact that you have multiple accounts at a bank is irrelevant, unless those fall into the same category.
For example, if you have an IRA with $250K in a bank, it is irrelevant whether you have a taxable account with another $250K in the bank. That IRA account is in a different category, and gets its own $250K insurance limit. (If you had two different IRAs in the same bank, then the sum of their balances would be insured only up to $250K, since they'd be in the same category.)
I would question whether what you have is a trust account or a joint account with right of survivorship. The fact that you say there is no named beneficiary, but rather that the account goes to the survivor suggests the latter.
The full FDIC brochure is extremely clear - plain English, big print, simple yet comprehensive examples.
From page 7: "Joint accounts owned in any manner ... such as joint tenants with right of survivorship." Example 3 on p. 9 shows how each of the owners of this joint account would receive $250K worth of coverage.
From page 10: "Revocable Trust Accounts ... The account title at the bank must indicate that the account is held pursuant to a trust relationship. This rule can be met using the terms payable on death (or POD), in trust for (or ITF), as trustee for (or ATF), living trust, family trust, or any similar language, including simply having the word 'trust' in the account title." Emphasis added.
Be that as it may, Examples 4 and 5 on p. 12 demonstrate how RTAs are covered. The rules there are a bit more complex - that's because it's the owner that getting insurance (for all the RTAs combined), but the amount of the insurance is based on the total number of named beneficiaries. Example 5 illustrates this in its full "glory".
And heaven help you if you've named more than five beneficiaries!
Hello to you msf, and you're right, it is quite clear and understandable. Appears that we qualify for the 500k coverage, as we have a revocable living trust with two co-owners.
Thanks a lot for the link to the FDIC brochure.
OJ
PS: If we ever need additional coverage we can name you as an additional beneficiary!
Comments
For example, if you have an IRA with $250K in a bank, it is irrelevant whether you have a taxable account with another $250K in the bank. That IRA account is in a different category, and gets its own $250K insurance limit. (If you had two different IRAs in the same bank, then the sum of their balances would be insured only up to $250K, since they'd be in the same category.)
I would question whether what you have is a trust account or a joint account with right of survivorship. The fact that you say there is no named beneficiary, but rather that the account goes to the survivor suggests the latter.
The full FDIC brochure is extremely clear - plain English, big print, simple yet comprehensive examples.
From page 7: "Joint accounts owned in any manner ... such as joint tenants with right of survivorship." Example 3 on p. 9 shows how each of the owners of this joint account would receive $250K worth of coverage.
From page 10: "Revocable Trust Accounts ... The account title at the bank must indicate that the account is held pursuant to a trust relationship. This rule can be met using the terms payable on death (or POD), in trust for (or ITF), as trustee for (or ATF), living trust, family trust, or any similar language, including simply having the word 'trust' in the account title." Emphasis added.
Be that as it may, Examples 4 and 5 on p. 12 demonstrate how RTAs are covered. The rules there are a bit more complex - that's because it's the owner that getting insurance (for all the RTAs combined), but the amount of the insurance is based on the total number of named beneficiaries. Example 5 illustrates this in its full "glory".
And heaven help you if you've named more than five beneficiaries!
Thanks a lot for the link to the FDIC brochure.
OJ
PS: If we ever need additional coverage we can name you as an additional beneficiary!
Noooo! Don't complicate my taxes