Unlimited FDIC Insurance Sunsets - Trustees Should Immediately Review their noninterest bearing accounts with Balances in Excess of $250,000 and Act Before 2013

by Bruce Sires

Bruce Sires

Effective after December 31, 2012, the currently unlimited insurance on non-interest bearing demand deposit accounts will be reduced to $250,000.  Trust companies and many individuals act as trustees over vast amounts of money and property.  Since unlimited insurance became effective for these accounts in  2011, it has become very easy to maintain significant amounts in a single account. 

Now, it is time particularly for individuals who are acting as a trustee for family, friends and clients, to take note of the pending change and act to confirm that you have adequate insurance, and can avoid any claim of breach of trust/fiduciary duty, which could from maintaining uninsured balances in excess of $250,000 in any one institution, without a reasonably considered basis for doing so.  This change has no effect on the insurance for interest bearing accounts, and does not apply to Money Market Deposit Accounts or NOW accounts.  If you are a trustee, custodian under a uniform transfer/gift to minors act, conservator or guardian, and currently maintain deposits in excess of $250,000, then before 2012 ends, determine for yourself if you hold uninsured accounts, and memorialize why you have determined that it is prudent for you to continue to hold such deposits, or take the actions necessary to avoid the effect of this change. 

I have been extensively involved in representing trustees and other fiduciaries, institutional and individual, concerning administrative and tax issues arising in trusts, probate estates, guardianships and conservatorships for more than 30 years. I'm an experienced trust and estates attorney, having represented numerous high net worth clients with their personal, family, tax and administrative issues arising in the accumulation and transmission of wealth.

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