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Question & Answer
Question: "I have a question on FDIC insurance. Suppose I have a certificate that is In Trust For (ITF) one child, but has both parents as trustees. Can that CD then be for $200,000 and still be fully insured? Or if there are joint trustees with two beneficiaries-can the CD then be for $400,000 and still be fully insured?"
Answer: Yes on both questions. The FDIC doesn't care if you put the money for revocable trusts in one account or in many accounts. As long as the relationship between the trustees and the beneficiaries is that of parent/grandparent and child or grandchild, all of the funds can either be by separate CDs or go into one CD.
In other words, if you had four grandchildren, you can open the CDs in two ways. Either a CD each for Grandmother ITF Grandchild # 1, one ITF #2, one ITF #3, and one ITF #4 and Grandfather ITF Grandchild # 1, and #2, and #3, and #4, at $100,000 each. Eight $100,000 CDs totaling $800,000-fully insured.
Or purchase one CD for $800,000 titled Grandmother/ Grandfather in trust for grandchild # 1, 2, 3 and 4. $800,000-fully insured.
Copyright © 1992 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 3, No. 3, 7/92
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