FDIC Insurance Explained
The FDIC has published a brochure explaining the amount of FDIC insurance for various situations including revocable trusts, irrevocable trusts, and entities such as corporations and LLCs.
Revocable trusts can easily qualify for $1,250,000 of coverage, and may qualify for even higher coverage in very narrow circumstances. Irrevocable trusts generally are limited to $250,000 of coverage. Likewise, entities are limited to $250,000 of coverage. The good news is that it is easy to expand the amount of coverage well beyond $250,000 by setting up accounts in the names of trusts and entities.
A lot of my clients add the names of their children on various accounts in order to expand FDIC coverage. These arrangements have gift tax risks and may distort the client's overall estate plan because the accounts will belong to the children after the client dies.
