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FDIC/NCUA details
Posted by: kal, October 9, 2017 05:46PM
I think I understand the basics of FDIC/NCUA insurance: given that I/wife revocable living trust has an account at a bank or credit union, and our two living children are beneficiaries of our trust, then we are covered up to $1M. I also understand that if we add exactly 3 charities as beneficiaries, even for a nominal amount, then our FDIC/NCUA insurance goes up to $2.5M.
My questions deals with the details of realizing this increased insurance, and avoiding pitfalls. Credit unions and banks have a form for listing the basics of a living trust, including naming the beneficiaries.
Is there a risk that the credit union (or bank) could mis-apply this listing? Potential pitfalls include: treating the list of beneficiaries as some sort of POD instruction, and splitting the account equally among my two children and the 3 charities (after second trustor dies, or even worse, after first trustor dies)? Another pitfall might be if one of our children is deceased at time of second trustor’s death, might the credit union or bank give the full amount to surviving child, thus ignoring per sitrpes instructions in the living trust? Our wishes are simply to have the beneficiary list treated by bank/credit union strictly for purposes of insurance coverage, and to rely on the living trust document itself to specify ultimate disposition of assets.
My second set of issues deals with the trust document itself. I/wife currently have an A/B/C trust written decades ago, and we are on the verge of changing to an A trust only (given that portability is now available to surviving spouse). Where in the new living trust would beneficiaries be named, given that surviving spouse takes full control of assets, and can then name his/her own set of beneficiaries after first trustor death? Would it be sufficient if we insert clause that if both trustors die in common accident, then the beneficiaries are as follows…?? Would this pass muster if FDIC needs to step in after a bank bankruptcy?
We are about to deal with a lawyer who we think is knowledgeable about estate planning, but doesn’t seem to have much experience about FDIC/NCUA coverage, so any help from this forum that we could bring to our lawyer would be greatly appreciated.



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