The FDIC has extended increased coverage of bank accounts for another four years. FDIC insurance is slated to remain at $250,000 per depositor, per institution through December 31, 2013, rather than reverting to $100,000 as originally anticipated. You need to pay particular attention to FDIC rules if your account is titled in the name of your revocable trust. For revocable trusts, the $250,000 coverage is per beneficiary on a proportionate basis.
To illustrate, let’s say you have $1,250,000 in a revocable trust at Bank A, and five beneficiaries in your trust. If each beneficiary gets an equal share ($250,000), then the full $1,250,000 in your trust is protected. But if one beneficiary gets 50% of your assets ($625,000), that leaves $375,000 of that share unprotected ($625,000 – $250,000). FDIC protection would thus cover only $875,000 of your trust assets ($1,250,000 – $375,000) at Bank A. Note: The same rules apply to “Payable on Death” or “In Trust For” accounts.