It helps to understand what motivatedthis change. FDIC gives the example of one failed bank situation where a title company had a deposit account into which it deposited funds as agent for customers who were buying or selling houses. Under the new rule, the FDIC would have the discretionary authority to recognize this type of account as an agency account and insure it accordingly. Insurance on Living Trust Accounts. Living trusts are hugely popular these days, but the insurance coverage on them is often not well-understood.
Most living trusts are revocable and are represented by a formal trust agreement.
In order to fit within the category of qualified beneficiaries, they must be the spouse, children, or grandchildren of the grantor. The trust agreement must provide that the funds shall belong to the beneficiaries upon the death of the owner and are not subject to any defeating contingencies. The revised rule clarifies coverage by specifically stating that the presence of a 'defeating contingency' in the trust agreement would prevent a beneficiary's interest from receiving separate deposit insurance coverage. An example, which helps illustrate coverage on these accounts, is also now included in the rule, which moves the provisions on revocable trust accounts from Section 330.8 to 330.10. All operations personnel should familiarize themselves with these important changes.