Listen to Lawrence…FDIC Question from a Client

July 30, 2020

Dear clients and friends,


Per your advice, all my beneficiaries say: 50% to the Trustee of the Trust for the Benefit of XXX XXXX under the Mike & Carol Brady Family Trust dated 10/13/08 (names changed to protect the innocent). Does this meet the requirement for extending the FDIC insurance?


Let’s start this analysis by assuming you have a CD. If it was in your name alone, it would be insured for $250,000 under the single account category. As a joint account, you would be insured for $250,000 for each joint owner. If the account names an individual beneficiary, then it is insured under the revocable trust category. The revocable trust category will extend coverage beyond $250,000 depending upon how many beneficiaries are named, among other factors that have been fully discussed in prior LISTEN TO LAWRENCE Emails which can be found on our website at or just Click Here.

This question, however, changes the fact pattern where the beneficiary is not an individual, but rather a formal trust. If the beneficiary formal trust is a revocable trust, the FDIC will consider the beneficiaries of the account to be the beneficiaries of the formal revocable trust. It will be as if the money was titled in the formal revocable trust. However, this will only be true if the owner (or co-owners) of the deposit account own 100% of the formal revocable trust named as beneficiary.


Mike Brady has a payable on death (POD) account at the bank naming the MIKE BRADY REVOCABLE TRUST as beneficiary. Mike is the sole owner/settlor of the trust and the trust names his three sons as beneficiaries. What is the maximum amount of insurance his POD account is entitled to?

The answer is $750,000 (3 x $250,000). When an individual account names a revocable trust as beneficiary AND the owner of the account and trust are the same, then it will be treated as if the money was held in the formal revocable trust. The beneficiaries of the Mike Brady Revocable Trust would be considered the beneficiaries of the POD account. Similarly, a joint account owned by Mike and Carol Brady that is titled “Mike and Carol Brady, POD Mike and Carol Brady Revocable Living Trust” would be insured the same as an account titled in the name of the co-owned trust.

Now back to the original question. The name of the trust is the Mike and Carol FAMILY trust. The title of the trust makes me question whether this is a revocable or an irrevocable trust. Most of my trusts that I name “Family” trust are irrevocable. Of course, you have to read the trust to make sure, but understand this……irrevocable trusts as beneficiaries of individual accounts do not provide the account owner with additional FDIC coverage and will be instead treated as an individual account….or joint account if there are two owners.

Therefore, assuming the Mike and Carol Brady Family Trust is an irrevocable trust, then the answer to the question above is that the account will be treated under the joint account category with $250,000 maximum coverage for each of the two owners.

I hope this helps.

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