California’s Living Trust Beneficiaries And FDIC Coverage

The financial bailout plan recently signed into law benefits Californians because bank accounts owned by living trusts can get more FDIC insurance than accounts owned by individuals. Trust accounts get the maximum FDIC insurance for every qualified beneficiary.

Until December 31, 2009, when the financial bail-out package expires, the FDIC now insures “qualifying beneficiaries” in California for $250,000 each. A qualifying beneficiary is a spouse, child, grandchild, parent, or sibling of the account owner. The account must be owned by the living trust.

This is how it works:

A single mom in Los Angeles County, Ventura County, Santa Barbara County or Orange County California sets up a living trust naming her two children as the beneficiaries after she dies, the bank account owned by the trust is insured up to $500,000: 2 beneficiaries at $250,000 each.

If my wife and I set up a living trust and all three of our children are the beneficiaries after we both die, the trust account is ensured for up to $1,500,000: $250,000 for each beneficiary and for each owner, or 6 x $250,000.

These FDIC limits are per bank not per account. If a California living trust owner has more than one account at the same bank, these limits apply to all their accounts there.

Be sure and confirm this with your banker in writing and avoid relying on any other informal sources.

To discuss your living trust, Will, durable power of attorney and advance health care, please call Mitchell A. Port at (310) 559-5259.