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Estate Planning 101:Bank account safety

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Marlene Cooper

Marlene Cooper

Estate Planning 101:Bank account safety

By Attorney Marlene S. Cooper From the Los Angeles Sentinel

The FDIC (Federal Insurance Deposit Corporation) protects depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails.  Several years ago IndyMac Bancorp Inc., a Pasadena-based mortgage lender, failed and was taken over by federal regulators.  At that time account holders risked losing all of the money held by that bank in excess of $100,000 since FDIC only provided deposit insurance up to $100,000. This situation caused many people to examine their bank accounts to see if they stood to lose their life savings should their bank fail.  In addition, the nation’s attention was turned to Wall Street and its excesses.

On July 21, 2010 President Barack Obama signed a law which permanently raised the maximum FDIC insurance coverage amount to $250,000. Thus, generally speaking, if a depositor’s accounts at one FDIC-insured bank or savings association total $250,000 or less, the deposits are fully insured. Where that account is in the name of a revocable living trust, special rules apply which could potentially insure the amount held up to $1,250,000 depending on the number of beneficiaries and each beneficiary’s designated share of the revocable trust deposits.  It should be noted too that the $250,000 coverage amount signed into law is retroactive.  This means that those that lost money in 2008 or after due to lack of coverage when an insured bank failed may receive a refund.

The foregoing discussion is a general overview of the rules regarding FDIC coverage and it should not be relied upon as determinative of insurance coverage for any specific account.  FDIC rules are complicated and can be found at the FDIC’s website, The FDIC has an on-line interactive application that can help you learn about deposit insurance called Electronic Deposit Insurance Estimator (EDIE) located on its website.  It allows you to calculate the insurance coverage of your accounts at each FDIC-insured institution.  Of course, you can always contact your bank or savings institution to have your accounts analyzed and obtain comfort and peace of mind that your money is 100 percent safe.

© 2013 by Marlene S. Cooper.  All rights reserved.  (Marlene S. Cooper, a graduate of UCLA, has been an attorney for over 30 years. Her practice is focused entirely on estate planning, estate administration and probate. You may obtain further information at, by e-mail at, by phone at (626) 791-7530 or toll free at (866) 702-7600.  The information in this article is of a general nature and not intended as legal advice.  Seek the advice of an attorney before acting or relying upon any information in this article).



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