FDIC Sheds Qualifying Beneficary Coverage Rule

The FDIC is going to make two changes to their coverage. One affects beneficiaries and one affects trust accounts, according to a bank insider who participated in teleconference call the FDIC held banks this morning as a refresher course on FDIC coverage. The big news is that the “qualifying beneficiary” rule is gone. Here’s the specifics:

It used to be, only beneficiaries that were direct family members qualified for the $100k FDIC coverage. Now, any beneficiary will receive full FDIC insurance coverage.

Our insider says, “Before, if a trust allocated assets to beneficiaries in unequal amounts, FDIC coverage was basically gimped. If there were 5 beneficiaries and 1 got 80% of assets and the rest were split between the other 4, FDIC coverage would not equal 500k

Now, regardless of allocation, FDIC will give 100k coverage to each beneficiary up to 5 beneficiaries. At 6 or more, if the allocation is not equal between all beneficiaries, it reverts to the old rules for amounts over 500k. If the allocation is the same, each beneficiary (to infinity) gets 100k coverage per grantor on the trust.”

So, good news, there’s more lenient FDIC coverage. A small measure designed to help stem the number of depositors, concerned about FDIC coverage, from yanking their accounts, These changes should be reflected on the FDIC website by Monday, said our source.

(Photo: andrewcarroll)

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