New FDIC Interim Rules on Trusts Change Some Requirements, Says Antelope Valley Estate Planning Law Firm

Antelope Valley estate planning law firm Thompson Von Tungeln discusses the new FDIC interim rules on trusts and how they affect trust holders and their beneficiaries.

Antelope Valley, California (PRWEB) November 5, 2008 -- According to the Antelope Valley estate planning law firm Thompson Von Tungeln, the new FDIC interim rules on trusts benefit trust holders and their beneficiaries primarily by eliminating some requirements and by increasing the amount that's FDIC-insured. Here are three main points to consider:

"Qualifying Beneficiaries" Now Eliminated. According to Mark E. Thompson, founding partner of estate planning law firm Thompson Von Tungeln, under the old FDIC rules, all revocable trust accounts (both living and "Pay On Death"--POD) are insured up to $100,000 per qualifying beneficiary. A "qualifying beneficiary" is defined as a spouse, children, grandchildren, parents and siblings. Under the FDIC's new interim rules, this concept of "qualifying beneficiary" is eliminated. "What this means," said Thompson, "is that FDIC coverage is extended to all beneficiaries of a trust, regardless of relationship."

Full $200,000 Value Covered, Even If Beneficiaries' Portions Unequal. Under the previous rules, when beneficiaries received unequal portions of a revocable trust valued at less than $500,000 or $1,000,000 for married persons, each portion was insured according to a formula that doled out insurance coverage proportionately, according to Thompson. For example, a trust valued at $200,000 is to be divided between two beneficiaries, Beneficiary A getting 30% and Beneficiary B getting 70%. Under the old rules, each beneficiary's FDIC-insured portion would be reduced proportionately. In this example, coverage on Beneficiary A's $60,000 would be reduced by 29% as would Beneficiary B's $140,000 portion. Therefore, each beneficiary would receive coverage for an amount less than his or her actual dollar amount. However, under the new interim rules, notes Thompson, each portion would be insured up to $200,000 and not proportionately reduced.

Rules for Determining Coverage of Living Trust Remain Same, Even If Some or All Converts to Irrevocable. Simply put, the trust amount insured for each beneficiary remains the same, no matter if the trust is revocable (the settlor of the trust is living) or if the trust becomes irrevocable (the settlor of the trust has died).

About Mark E. Thompson

With more than 30 years' legal experience, Mark E. Thompson serves Thompson Von Tungeln in the areas of estate planning, probate, trusts, wills, trust administration, conservatorships, guardianships, and elder law. He is certified by the State Bar of California Board of Legal Specialists as a Board Certified Specialist in Estate Planning. In addition to his legal work, Thompson also serves with many other community organizations.    

About Thompson Von Tungeln

Antelope Valley estate planning law firm Thompson Von Tungeln (TVT) offers sophisticated estate planning and administration for the affluent, discriminating client. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve these clients with the creative, effective and custom solutions they demand. For more information, contact TVT at 661-945-5868 or visit their website at www.tvttrustlaw.com.

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