As you have undoubtedly heard by now, the recent collapse of Silicon Valley Bank (SVB) has many investors and bank depositors concerned about the safety of their funds at their local financial institutions. Though in general, each account is entitled to $250,000 of FDIC insurance, the rules for accounts that are titled as trust accounts (i.e., accounts titled in the name of your revocable trust) are different.

In general, the owner of a revocable trust account is insured up to $250,000 per each primary beneficiary. Coverage will depend upon the number of beneficiaries that the trust has. If the number of beneficiaries in the trust is five or less, the calculation of coverage is fairly straightforward. The number of owners multiplied by the number of beneficiaries multiplied by $250,000 gives you the insurance coverage amount for the account.

When the number of beneficiaries is greater than five, and the aggregate balance of the accounts exceeds five times $250,000 (i.e., $1,250,000), the calculation of coverage is more complicated. First, according to the FDIC, “the funds are allocated to the various beneficiaries. Second, the insurance limit (the SMDIA) is applied separately to each beneficiary’s interest. To the extent that any beneficiary’s interest exceeds the SMDIA, the excess will be uninsured. At a minimum, however, the accounts (with more than five beneficiaries) will be fully insured up to five times $250,000 (i.e., $1,250,000).”

The long and the short of this is that if you have delayed converting your bank accounts to be owned by your trust, you may want to do so now in light of the recent collapse of SVB because in most cases (as long as you have multiple beneficiaries of your revocable trust), the insurance coverage for your bank account will likely be greater if the account is a trust account instead of simply a bank account in your name that names your trust as the pay-on-death (POD) designee upon your death.

If you, a friend or family member need help establishing or updating your trust based estate plan, please contact our Intake Department at (760) 448-2220 or at

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