FDIC Insurance for Living Trust Accounts

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n00b_to_investing
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FDIC Insurance for Living Trust Accounts

Post by n00b_to_investing »

Wondering if the FDIC insurance for Living Trust Savings / Checking accounts is the same as a typical Joint account i.e., $250K per account holder.
Also, how about the FINRA/SIPC coverage for Non retirement brokerage accounts ?

At the very least one would expect the rules / guidelines to be consistent across banks / brokerage firms or one should read the fine prints carefully.

As always your response much appreciated !
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prudent
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Re: FDIC Insurance for Living Trust Accounts

Post by prudent »

You can experiment with the FDIC calculator https://www.fdic.gov/edie/calculator.html
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dm200
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Re: FDIC Insurance for Living Trust Accounts

Post by dm200 »

prudent wrote:You can experiment with the FDIC calculator https://www.fdic.gov/edie/calculator.html
For federally insured credit unions, http://www.ncua.gov/DataApps/Pages/SI-Tools.aspx

this is the actual calculator http://webapps.ncua.gov/ins/calculator.html
kaneohe
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Re: FDIC Insurance for Living Trust Accounts

Post by kaneohe »

a quick playing w/ the edie calculator suggests that coverage scales w/ each owner/beneficiary combination so if
you have 2 owners and 3 beneficiaries , you get 6x the coverage of a single owner. To me there was some ambiguity
in the meaning of beneficiary since for a living trust, a single person can be trustor/trustee/beneficiary but FDIC uses beneficiary in this context to mean the beneficiary when the owner(s) die. They are quite good about answering questions so if you have any, you can e-mail them.
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dm200
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Re: FDIC Insurance for Living Trust Accounts

Post by dm200 »

On the issue of "consistency", the NCUA (for federally insured credit unions) rules/limits and the FDIC (for federally insured banks) rules/limits should be identical. A few years ago, there was a very brief period (I think) where NCUA was not absolutely identical while the NCUA rules were catching up to the FDIC ones, since the NCUA and FDIC have different governance. That difference (if there was one) was merely a matter of timing of board meetings and similar scheduling. While almost all U.S. credit unions are federally insured, there are about 200 or so state chartered credit union in 9 states that have chosen private insurance. I would always independently check any credit union (bank as well) by searching on the NCUA web site to see "federally insured".

I don't know about SIPC, but that is a very different kind of backing and I would not expect consistency.
rixer
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Re: FDIC Insurance for Living Trust Accounts

Post by rixer »

The way I understand it is each beneficiary is insured up to $250,000. Anything over that amount would not be insured.
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dm200
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Re: FDIC Insurance for Living Trust Accounts

Post by dm200 »

rixer wrote:The way I understand it is each beneficiary is insured up to $250,000. Anything over that amount would not be insured.
Actually, it is not "beneficiaries" who are insured, but rather the account balance - up to the applicable limits.
rixer
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Re: FDIC Insurance for Living Trust Accounts

Post by rixer »

dm200 wrote:
rixer wrote:The way I understand it is each beneficiary is insured up to $250,000. Anything over that amount would not be insured.
Actually, it is not "beneficiaries" who are insured, but rather the account balance - up to the applicable limits.
dm200, do you mean the total account balance of the trust is only insured to $250,000? I thought that the total balance of what each beneficiary received was insured up to that amount. That's what I was told at the credit union. Is this wrong?
kaneohe
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Re: FDIC Insurance for Living Trust Accounts

Post by kaneohe »

I think he means that if the bank goes belly up the owners are insured up to the insured amount..........they get the money , not the beneficiaries(unless the beneficiaries have become the owners)........the beneficiaries (and owners)are just used to calculate the amount of the insurance.
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dm200
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Re: FDIC Insurance for Living Trust Accounts

Post by dm200 »

kaneohe wrote:I think he means that if the bank goes belly up the owners are insured up to the insured amount..........they get the money , not the beneficiaries(unless the beneficiaries have become the owners)........the beneficiaries (and owners)are just used to calculate the amount of the insurance.
Right. For example, POD (Payable On Death) Beneficiaries have no rights or claim or even knowledge of that designation long as the account owner(s) still live. POD beneficiaries, DO increase the FDIC or NCUA insurance. So, if I had $1,000,000 in an account at the XYZ Federal Credit Union and named 4 POD Beneficiaries, and the credit union fails, then the NCUA federal insurance give me (as long as alive) the $1 Million -- NOT the beneficiaries.
sport
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Re: FDIC Insurance for Living Trust Accounts

Post by sport »

If a trust names one beneficiary if living, otherwise two beneficiaries equally, how would the insurance limit be calculated?
Jeff
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dm200
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Re: FDIC Insurance for Living Trust Accounts

Post by dm200 »

jsl11 wrote:If a trust names one beneficiary if living, otherwise two beneficiaries equally, how would the insurance limit be calculated?
Jeff
Not sure. That might be one to contact NCUA or the FDIC. The bank or credit union needs to know the number of beneficiaries in order to accurately pay the annual premiums or assessments - although inaccurate reporting by a bank or credit union does not void the legitimate insurance coverage.
rixer
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Re: FDIC Insurance for Living Trust Accounts

Post by rixer »

dm200 wrote:
kaneohe wrote:I think he means that if the bank goes belly up the owners are insured up to the insured amount..........they get the money , not the beneficiaries(unless the beneficiaries have become the owners)........the beneficiaries (and owners)are just used to calculate the amount of the insurance.
Right. For example, POD (Payable On Death) Beneficiaries have no rights or claim or even knowledge of that designation long as the account owner(s) still live. POD beneficiaries, DO increase the FDIC or NCUA insurance. So, if I had $1,000,000 in an account at the XYZ Federal Credit Union and named 4 POD Beneficiaries, and the credit union fails, then the NCUA federal insurance give me (as long as alive) the $1 Million -- NOT the beneficiaries.

Okay, that makes sense. thanks!
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