FDIC Insurance Question

[dbc47]

I am a Co-Trustee of my Aunt's Revocable Living Trust. She has funds coming available to her over $100K. She wants to put the funds into CD's at Wachovia Bank (She likes them and their rates). I asked the guy at the bank if it was possible to invest more than the $100K at the bank and he said that what they do (if I understood him correctly), is that anything over the $100K can be deposited into their "Branch", if that's the right word, in Denver which is somehow registered differently. So in essence what that would do would be splitting up the CD's so there wouldn't be any CD over the $100K limit at any particular branch.? Am I being fed a line here or is this guy on the level? I looked at the FDIC site and couldn't find any information on this "tactic".

[Mel Lindauer]

I am a Co-Trustee of my Aunt's Revocable Living Trust. She has funds coming available to her over $100K. She wants to put the funds into CD's at Wachovia Bank (She likes them and their rates). I asked the guy at the bank if it was possible to invest more than the $100K at the bank and he said that what they do (if I understood him correctly), is that anything over the $100K can be deposited into their "Branch", if that's the right word, in Denver which is somehow registered differently. So in essence what that would do would be splitting up the CD's so there wouldn't be any CD over the $100K limit at any particular branch.? Am I being fed a line here or is this guy on the level? I looked at the FDIC site and couldn't find any information on this "tactic".

It's possible that they are two separate entities under the corporate umbrella. Perhaps another bank that they purchased but haven't fully "swallowed"?

Regards,

Mel

[djw]

Why take a chance?

Has your aunt heard the saying about not putting all of your eggs in one basket?

While the employee may very well be giving you correct information, personally I wouldn't take that chance, especially in the current environment where reputable financial experts anticipate multiple bank failures over the next year or two, including large banks. Also, the status of the Denver bank may change without notice to you, putting her over the limit.

Also, is she "laddering" her CDs with different maturity dates so that they periodically come due so withdrawals can be made without penalty if desired and she can benefit from interest rates which are likely to rise over the next few years?

Has she considered treasuries or TIPS?

[Rob5TCP]

To play it safe, maybe she should split it among two or more "high" yield CD's from different banks

A good site for national hi rates


http://bankdeals.blogspot.com/

And as mentioned above layering is probably a good idea as well.

[Stevewc]

Hello,
By adding names and even beneficiaries (to her account cd's) the banks can cover way over 100k with FDIC. If you ask the bank they probably have a brochure explaining all this.
Hope this helps,
Steve

[gassert]

If this is a living trust, then the account would need to be titled as such and wouldn't have additional names or benys so you wouldnt be able to take Steve's advice - though that's a good idea.

I wouldn't question this banker - I mean it doesn't hurt to question and verify the info is correct - but I don't see a problem here.

However. to make it easier I would just use a discount brokerage and buy multiple CDs from different banks. I don't think you'll see too much difference in rates, but it would depend on the inventory

[dbc47]

Thanks everyone for your suggestions! In my brief discussion with the banker he did say that he would call the FDIC and confirm what he was telling me is correct. I don't think I'm being mislead regarding this, but it never hurts to trust but verify. Thanks again.

[dm200]

Services, where I purchase Brokered CDs, often has slightly different names for the CDs offered by the same bank/thrift. The difference often is that the branch is in the name.

I asked Vanguard about whether these were separate institutions (different $100,000 coverage) or the same. They told me that all CDs from all branches counted in the same $100,000 limit.

I don't know about Wachovia, but ome financial institutions offer completely legitimate ways of increasing the $100,000 federal limit by booking the deposits with differently named (and insured) institutions.

I would not depend on the rep of the bank. Rather, I would get the actual names of the separately insured institutions and check the FDIC web site myself.

[tomd37]

I have several accounts (CDs, MM account) with my bank where the accounts are titled in the name of John Doe or Mary Doe. I am about to reach the $200,000 FDIC limit and asked the banker what I can do. He said I could open an account in my name, open an account in my wife's name and those would give us another $100,000 coverage each. He talked about additional methods, but I did not pay attention because I doubt I would have that much cash invested in his bank. Of course I know I could go to other banks or credit unions.

[NAVigator]

Hello,
By adding names and even beneficiaries (to her account cd's) the banks can cover way over 100k with FDIC. If you ask the bank they probably have a brochure explaining all this.
Hope this helps,
Steve

I ran into this situation with Pen Fed and I mentioned that since I am single, I am somewhat lmiited in extending my FDIC coverage. The rep said that since I have a beneficiary on the CD, each of us would be covered up to the limit, so the coverage is double the normal amount. That is the first I have heard of this arrangement until this post.

Jerry

[Easy Rhino]

http://www.fdic.gov/deposit/deposits/insured/

Housing the deposit at "a different bank" may be possible. dunno. But there are lots of "account titling" tricks that can be done.

Husband's single account ($100)
Wife's single account ($100)
H&W joint account ($200)
Throw in trust accounds with two kids and two parents and the different combos (~$400k I think)