Trust Accounts
There are cases where deposits/accounts may be held in trust. For example, a parent (the trustee) may establish a bank account at a member institution for his/her child (the beneficiary). In this case, the deposit is being held in another right and capacity for the purpose of calculating the insurable amount.
Illustration A: Calculation of DI Coverage on Trust Account
In a simple scenario, Joe establishes a trust account for his two sons, and also has two accounts with the same member institution.
| Depositor | Accounts | Branch | Amount | Insured | Comments |
|---|---|---|---|---|---|
| Joe | Savings | Main | $15,000 |
Joe is the depositor on 3 accounts, including 1 trust account.
He is the beneficial owner of 2 accounts.
Trust account balances are not combined with a trustee’s individual accounts, so to obtain the insurable/payout amount, deposits which are beneficially owned by Joe are added together and the loan balance deducted from the deposits to obtain the insurable/payout amount. Deposits held on the trust account are insured separately, with each beneficiary’s interest being insured up to a maximum of $50,000 for a total coverage of $100,000. |
|
| Checking | Bay | $5,000 | |||
| Loan | Bay | ($5,000) | |||
| Total | $15,000 | $15,000 | |||
| Joe in trust for John/Mike | Savings | Main | $200,000 | $100,000 | |
| Grand Total | $115,000 | ||||