Understanding FDIC Coverage on Trust Accounts: A Crucial Aspect of Estate Planning

When it comes to estate planning, ensuring the protection and distribution of assets is paramount. Trusts are a popular tool utilized to safeguard assets and dictate their allocation according to the grantor’s wishes. However, understanding the nuances of Federal Deposit Insurance Corporation (FDIC) coverage on trust accounts is crucial to safeguarding these assets for beneficiaries. At Botti & Morison Estate Planning Attorneys, we recognize the importance of comprehensive estate planning, which includes navigating the complexities of FDIC coverage. In this blog post, we’ll delve into the critical aspects of FDIC coverage on trust accounts and how it impacts estate planning strategies.

What is FDIC Coverage?

The FDIC is an independent agency of the United States government created to protect depositors and maintain stability in the banking system. FDIC coverage provides insurance for deposits held at FDIC-insured banks and savings associations, covering up to a certain amount per depositor, per account ownership category, at each insured bank.

FDIC Coverage for Trust Accounts

Trust accounts are unique in that they involve multiple parties: the grantor (creator of the trust), the trustee (individual or entity managing the trust assets), and the beneficiaries (those entitled to receive assets from the trust). FDIC coverage for trust accounts is determined based on the ownership interests of each party.

  1. Revocable Trusts:
    • Revocable or living trusts are commonly used in estate planning to avoid probate and manage assets during the grantor’s lifetime and after their passing. For FDIC coverage purposes, revocable trust accounts are insured up to the standard maximum deposit insurance amount ($250,000) per beneficiary, provided these specific requirements are.
      • The trust must be revocable, meaning that the grantor retains the ability to modify or revoke the trust during their lifetime.
      • The beneficiaries of the trust must be identifiable individuals or qualifying entities.
      • The trust documentation must meet certain legal requirements, including proper titling and beneficiary designations.
      • The trustee must comply with FDIC regulations regarding reporting and documentation.

Meeting these requirements ensures that the assets held in the revocable trust account are eligible for FDIC insurance coverage up to the specified limit for each beneficiary.

    • Beneficiaries named in the trust are insured separately from other accounts the grantor may have at the same bank. This means that if the grantor has individual or joint accounts, the funds in the trust account are insured separately from those other accounts up to the coverage limit.
  1. Irrevocable Trusts:
    • Irrevocable trusts, where the grantor relinquishes control over the assets placed into the trust, may have different FDIC coverage rules depending on the circumstances.
    • If the trust qualifies as an “employee benefit plan trust” or a “certain funeral or burial trust,” it may be eligible for higher coverage limits.
    • However, if the irrevocable trust does not meet these criteria, FDIC coverage is based on the interests of the beneficiaries, similar to revocable trusts.

Importance of Proper Structuring

Proper structuring of trust accounts is essential to maximize FDIC coverage and protect assets. Working with experienced estate planning attorneys, such as Botti & Morison, ensures that trust documents are drafted correctly to comply with FDIC regulations and achieve the desired asset protection goals.

Review and Update Regularly

Estate planning is not a one-time event; it requires periodic review and updates to reflect changes in circumstances, laws, and regulations. As FDIC coverage limits and regulations may change over time, it’s crucial to review trust accounts periodically to ensure they remain adequately protected.


Navigating FDIC coverage on trust accounts is vital to comprehensive estate planning. Understanding how FDIC insurance applies to different types of trusts and structuring accounts accordingly can help safeguard assets for beneficiaries. At Botti & Morison Estate Planning Attorneys, we specialize in crafting tailored estate plans that address our clients’ unique needs and objectives, including maximizing FDIC coverage on trust accounts. Contact us today to schedule a consultation and take proactive steps to protect your legacy.

[Disclaimer: This blog post is for informational purposes only and should not be construed as legal advice. Readers are encouraged to seek professional assistance from qualified attorneys for their estate planning .]

Thanks for reading.

Christopher E. Botti, Esq., Certified Specialist in Estate Planning, Trust and Probate Law