Gabb Morrison LLP

FDIC coverage and trusts (yes, even some Banks don't know this):

Under certain circumstances, ONE trust (either revocable or irrevocable) may have $2,500,000 of FDIC coverage! So, yes, if you are uber-rich (and have a lot of beneficiaries) you can literally have just one CD (certificate of deposit) titled in the "Doe Living Trust" name FDIC insured for $2,500,000!

Here is how - FDIC coverage is up to $1,250,000 per Trustor/Settlor/Grantor, if you have 5 (or more) distinct beneficiaries. So, if husband and wife have a JOINT LIVING TRUST (as 99% of our married trusts are) then if there are 5 (or more) beneficiaries for each Settlor under the trust, then each Trust Settlor (e.g. husband and wife) would get the full $1,250,000 of coverage, hence the $2,500,000.

And yes, it's even possible that the FDIC coverage could be even more if perhaps there were additional Settlors (but this is very rare for us).

You do NOT get the $250k of FDIC coverage for each Settlor, only for the beneficiaries, so if H/W joint trust only has two beneficiaries each (e.g. their son and daughter) they would only get $1,000,000 of FDIC coverage ($250k x 4).

This same rule applies to bank accounts/CDs that have P.O.D. (payable on death) beneficiary designations, again, it ONLY applies to the POD beneficiaries, NOT the account owner(s). Now, if you did not name POD beneficiaries (or Bank somewhere that simply doesn't offer POD accounts, hey MEGA-BANK you know who you are), then each account owner would get their own $250k of FDIC coverage each.

In the comments section below, I have a link to the cool FDIC estimator link.

The SECURE Act laws began in 2020 and did drastically change the timeline that MANY people must pull out of an IRA that they inherited from a deceased loved one. However, note that I didn't say ALL people (or even MOST). There are still quite a few beneficiaries that are still allowed to pull out over their own life expectancies, just like BEFORE the SECURE Act was passed.

One of those lessor known beneficiaries (called an "Eligible Designated Beneficiary" or EDB) is someone who is NOT more than 10 years younger than the original deceased IRA owner. In this case, it was the deceased's brother who was almost 2 years OLDER than his deceased brother. This means this EDB is able to continue the IRA as an "inherited IRA" and only has to take Required Minium Distributions (RMD) over his own life expectancy which was almost 15 years, 5 years LONGER than the new SECURE Act rule which is "all by December 31st of the 10th year following the original IRA owner's death".

This man's financial advisor told him it only applied if he was YOUNGER than his brother...ummm..NO! Just as long as he is NOT MORE THAN 10 YEARS YOUNGER, really?

The other qualifications for EDB are: 1) SPOUSE 2) Disabled or Chronically Ill beneficiaries (obviously for special needs children) and 3) MINOR children (another big misconception but I will make it easy - by December 31st of the year they turn 31 years old, and it's only children or stepchildren, NOT GRANDCHILDREN).