Are Your Bank Accounts Safe? FDIC Insurance Can Cover You – With the Right Planning
Are you concerned about the safety of your bank accounts? If yes, your fears are justified. In early 2008, the Federal Deposit Insurance Corporation (â?? ????), FDIC which insures bank deposits, reported the largest increase in "problem institutions" it has seen since the savings and loan crisis of the late 1980s. Â The FDIC has identified 76 problem banks, an increase of 52% over the previous year. Â In fact, some experts predict that 200 bank failures could occur in the coming years. From this impression, the October 26, 2009, there were over 100 bank failures.
But there?? S some good news. Â With proper planning you can protect your property, even if you have considerable assets.
The FDIC insures bank accounts. Â Each individual is covered for up to $ 250,000 of assets (the back cover to $ 100,000 on January 1, 2010). The limit is based on account ownership?? If you have three different accounts for a total of $ 500,000 at a single institution, only $ 250,000 are covered. Â One way to increase the amount of FDIC insurance in any bank is to designate a property different accounts in the bank. Â Suppose you have $ 500,000 in your name alone, in this case, only $ 250,000 are covered. Â If you divide the accounts if you have $ 250,000 and your spouse owns $ 250,000, the full amount of 500,000 is covered. Although this is an easy way to get better FDIC coverage for accounts in the same financial institution, it can cause problems when the spouse whose name is not on an account must have access to funds in that account.
Another option is to avoid placing more than $ 250,000 with a financial institution. Â If you and your spouse held $ 1,250,000 in assets equally between five different banks, all funds will be fully insured. To make the process easier, the Certificate of Deposit Account Registry Service (CDAR), a program that divides your assets across a network of institutions, can help you maintain insurance cover-age on the funds until up to 50 million dollars.
Arguably the best solution is to place the accounts on behalf of a Revocable Living Trust. Properly managed, the amount of FDIC insurance on bank accounts held by a revocable living trust can then be much greater. Â Why? Regulations now allow coverage to be calculated not only property but also the number of beneficiaries identified in the trust agreement. Â If your name two beneficiaries of trust in equal shares, the account is covered up to $ 500,000. Â In the right circumstances, if you and your spouse set up a joint trust, the coverage could extend to $ 1,000,000!
Coverage is limited to persons who receive assets upon your death. If your going to trust your son Johnny, and after his death, your daughter Suzie, Johnny is the only beneficiary account.
Rules of FDIC insurance coverage may become more complicated in certain circumstances: when there are more than two owners of a revocable trust where the trust property is not equal, or when the beneficiaries receive not equal to the trust at the death of the owner. Moreover, the regulations for calculating the amount of FDIC insurance coverage for an irrevocable trust are different than for a Revocable Living Trust.
Our office can help you ensure that your possessions are covered in case of failure of a bank, and help you take advantage of changes in state and federal regulations regarding your estate plan. Call us to find out how we can help you determine the best way to protect your assets and plan for your pet?? S future.
