FDIC Changes Insurance Coverage of Trust Bank Accounts - Effective April 1, 2024

Posted by Gayla K. AustinAug 23, 20230 Comments

Soon--April 1, 2024--accounts held by trust may be insured by the FDIC for up to $1.25 million rather than the current $250,000 limit on most individual accounts.  

Most funded trusts have one or more bank accounts:  checking, savings-- and those accounts are insured by the FDIC.  Regulations on how much the trust accounts are covered by FDIC insurance are calculated differently than that for individual account owners.  Now,  most trust accounts, whether revocable or irrevocable, are limited to $250,000 per FDIC insured bank. 

The FDIC final regulations will change how bank accounts held by a trust will be insured and effects both revocable and irrevocable trusts the same for determining the limits on insurance.  

Under the new rules, funds are insured up to $250,000 per beneficiary per FDIC insured bank.  The total insured is limited to 5 beneficiaries or $1,250,000 but all grantors are also covered up to $250,000.  

To qualify, an irrevocable trust (where the maker is deceased) must:  

1.  be a valid trust under state law; 

2.  the purpose of the trust is disclosed to the bank and 

3.  the amount due to the beneficiary cannot be contingent (that the beneficiary survive to a certain date).  

Note that a "Pay on Death" or Totten trust, which is an informal trust account is a revocable trust.  

Documents that support your trust, give instructions and beneficiary designations can be delivered to your bank. 

Please call 307.200.1914 for a free consultation regarding your trust bank accounts.