FDIC Insurance Rules for Trusts are Changing

The FDIC recently approved a rule to change how it calculates the amount of insurance is available for bank accounts held in trusts.  Effective 4/1/2024, a trust account will be insured up to $250,000 per beneficiary, not to exceed five, regardless whether the trust is revocable or irrevocable or how the trust allocates inheritance among beneficiaries. 

For example, a joint living trust for a married couple with 2 children might qualify for up to $1,000,000 of FDIC deposit insurance.  But a joint living trust for a married couple with 5 children would only qualify up to $1,250,000. 

The new rule is intended to simplify the calculation of an insurance pay-out in the event of a bank failure, which I do believe it accomplishes. 

Initially posted on March 11, 2022