A gift to help with your New Year’s resolution


If one of your New Year’s resolutions this year includes getting your financial and legal affairs in order should something unexpectedly happen to you, I have a gift I think you’ll enjoy.

To be specific, I just put the finishing touches on a free report I wrote entitled, “What You Don’t Know CAN Hurt Your Family: 5 Easy Ways to Make Sure Your Children, Wishes and Assets Stay Protected Should Something Happen to You”.

In this report you’ll learn 5 easy ways to get your legal and financial affairs in order, just in time for the New Year.  You won’t even need the help of an attorney for some of these important steps; simply follow my instructions in the guide and cross each item off of your “to-do” list as you go.

You’ll also discover:

  • How to legally name guardians for your minor children in a way that will hold up in a court of law
  • The difference between a will and a trust, and which tool you really need to make sure your family, wishes and assets stay protected upon your passing.
  • The details about simple document you can use to give someone legal permission to act on your behalf if you were incapacitated in an accident but did not die (…and without this document, no one will be able to help you under the current HIPPA laws!)
  • How to amass your “entire family wealth” and leave a true legacy to your children (hint: you don’t have to be wealthy and it’s easier than you think!)
  • And so much more!

To grab a copy of this report, simply visit http://bit.ly/gNUxIJ.

I’d also like to encourage you to forward this to any of your family or friends who really need to get their affairs in order just in time for the New Year.  I would especially encourage you to reach out to anyone who has minor children, owns their own home, cares for aging parents or is approaching retirement age themselves.

Again, you can get a copy of this free report now by going to http://bit.ly/dGpJM1. 

All my best,


Late breaking news from FDIC insurance and trusts

Deposit Insurance Coverage
Changes to FDIC Deposit Insurance Rules for Revocable Trust Accounts
Revised as of October 8, 2008

Summary: The FDIC has adopted an interim regulation simplifying the rules for insuring revocable trust accounts – commonly known as payable-on-death accounts and living trust accounts. The new rules are easier to understand and apply, and provide at least as much coverage as the former rules for revocable trust accounts. The revised rules take effect today and apply to all existing and future revocable trust accounts at FDIC-insured institutions. The FDIC welcomes comments on the interim rule for 60 days after its publication in the Federal Register.

Under the interim rule:

  • The concept of "qualifying" beneficiaries based on certain family relationships has been eliminated.
  • For each account owner with combined revocable trust deposit balances of $1.25 million or less at a single bank, the maximum coverage will be determined by multiplying the number of different beneficiaries by $250,000. (This will apply to the vast majority of revocable trust accounts.)
  • For each account owner with combined revocable trust deposit balances of more than $1.25 million and more than five named beneficiaries, coverage is the greater of $1.25 million or, as before, the aggregate of all beneficiaries’ proportional interests in the trust deposits, limited to $250,000 per beneficiary.
  • In determining coverage for living trust accounts, a life estate interest is valued at $250,000.
  • Irrevocable trusts that spring from a revocable trust upon the death of the revocable trust owner will continue to be insured under the revocable trust rules.

Continuation of FIL-99-2008

All FDIC-Insured Institutions

Suggested Routing:
Chief Executive Office
Head of Deposit & Branch Operations
Compliance Officer
Training Officer

Related Topics:
FDIC Deposit Insurance Regulations 12 C.F.R.
Part 330

Draft Federal Register Notice

FDIC Call Center at 1-877-275-3342

FIL-99-2008 – PDF (PDF Help)

Printable Format:

FDIC financial institution letters (FILs) may be accessed from the FDIC’s Web site at www.fdic.gov/news/news/financial/2008/index.html.

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.

Paper copies of FDIC financial institution letters may be obtained through the FDIC’s Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562- 2200).

Financial Institution Letters
Revised as of October 8, 2008

Deposit Insurance Coverage
Changes to FDIC Deposit Insurance Rules for Revocable Trust Accounts

The FDIC Board of Directors has issued an interim rule to simplify the coverage rules on revocable trust accounts without decreasing coverage. The FDIC believes the interim rule will make the regulation easier for depositors and bankers to understand and apply. It will also result in more rapid deposit insurance determinations following bank closings and will help strengthen public confidence in the nation’s banking system.


Two types of revocable trust accounts are insured under the FDIC’s coverage rules: informal trust accounts and formal trust accounts. Informal trust accounts consist of a signature card on which the owner designates the names of beneficiaries to whom the funds in the account will pass upon the owner’s death. These are the most common type of revocable trust accounts and generally are referred to as "payable-on-death" (POD) accounts. The other type of revocable trust accounts are accounts established in connection with formal revocable trusts. Formal revocable trusts are created for estate planning purposes and are referred to as living or family trusts.

The FDIC’s former rules stated that all revocable trust accounts (both POD accounts and living trust accounts) were insured up to $250,000 for the interest of each "qualifying beneficiary" designated by the owner of the account. Qualifying beneficiaries were defined as the owner’s spouse, children, grandchildren, parents, and siblings.

Summary of the Interim Rule

The interim rule eliminates the concept of qualifying beneficiaries. The relationship between the trust owner and the beneficiaries no longer affects deposit insurance coverage. Under the interim rule, coverage is based on the existence of any beneficiary named in the revocable trust, as long as the beneficiary is an individual, a charity, or another nonprofit organization.

For revocable trust account owners with balances of $1.25 million or less in one FDIC- insured institution, the interim rule eliminates the former requirement that based coverage on the proportional interest of each beneficiary in the trust deposit. For each trust owner with combined revocable trust account deposits of $1.25 million or less at a single bank, the maximum coverage will be determined by multiplying the number of different beneficiaries by $250,000. (This will apply to the vast majority of revocable trust account owners.) Note that for revocable trust deposits that are jointly owned, the $1.25 million threshold would apply to each co-owner’s share of all revocable trust deposits at one FDIC-insured bank.

For revocable trust accounts where the owner has more than $1.25 million in one FDIC- insured institution and has named more than five different beneficiaries in the revocable trust(s), the maximum coverage is the greater of either $1.25 million or the aggregate amount of all the beneficiaries’ proportional interests in the revocable trust(s), limited to $250,000 per beneficiary. (The impact of the interim rule results in no depositor being insured for an amount less than he or she would have been entitled to under the former revocable trust account rules).

In addition, the FDIC reminds insured institutions that the rules for coverage of informal revocable trust (payable on death) accounts require that the names of all trust beneficiaries be disclosed in the institution’s account records. The FDIC also encourages bank customers to make certain that the names of living trust beneficiaries are included in the bank’s account records.

The attached draft Federal Register notice provides details on the rule changes. Once the interim rule is published in the Federal Register, the FDIC will distribute a copy of that document in a follow-up FIL and highlight the due date for comments.

Sandra L. Thompson
Director Division of Supervision and Consumer

New FDIC rules for inter vivos trust accounts

FdicOn September 26, 2008, the FDIC issued interim final regulations entitled Deposit Insurance Regulations; Living Trust AccountsThe interim rules amend 12 CFR 330 and took effective immediately, pending a  sixty day comment period before finalization.

Here is a summary of the new regulations:

The FDIC is adopting an interim rule to simplify and modernize its deposit insurance rules for revocable trust accounts. The FDIC’s main goal in implementing these revisions is to make the rules easier to understand and apply, without decreasing coverage currently available for revocable trust account owners. The FDIC believes that the interim rule will result in faster deposit insurance determinations after depository institution closings and will help improve public confidence in the banking system. The interim rule eliminates the concept of qualifying beneficiaries. Also, for account owners with revocable trust accounts totaling no more than $500,000, coverage will be determined without regard to the beneficial interest of each
beneficiary in the trust.

Under the new rules, a trust account owner with up to five different beneficiaries named in all his or her revocable trust accounts at one FDIC-insured institution will be insured up to $100,000
per beneficiary. Revocable trust account owners with more than $500,000 and more than five different beneficiaries named in the trust(s) will be insured for the greater of either: $500,000 or the aggregate amount of all the beneficiaries’ interests in the trust(s), limited to $100,000 per beneficiary.

SOURCE: Wills, Trusts & Estates Prof Blog

Make sure your money is 100% protected! FOR MORE DETAILED INFORMATION get a free special report on "If Your Bank Fails, Will You Get Your Money Back? What You Need to Know About FDIC Coverage." Click Here.

September Financial Collapse 101

Victor_photoframe The following article is written fellow Personal Family Lawyer, Victor Medina, of the New Jersey law firm of Medina, Martinez & Castroll, LLC, and author of the New Jersey Estate Planing Blog.

September saw the collapse of three major financial or insurance institutions in the U.S.: Freddie Mac/Fannie Mae, AIG and Lehman Bros. Although the reasons for each differed, the common denominator in all three cases was the inability of the firms to retain financing.

Freddie Mac/Fannie Mae Takeover

Freddie/Fannie were set up to support the housing market in that they guaranteed mortgages and were able to fund these guarantees by issuing their own debt, which was backed by the government. Many investors, who saw the government-backed debt as the substitute for US Treasury securities, bought lots of it. Weakly supervised, Freddie/Fannie used their subsidized financing to buy mortgage-back securities, which were backed by pools of mortgages that did not meet their usual standards. Their thin capital was not enough to cover losses on the subprime mortgage market, and facing massive collapses everywhere if Freddie/Fannie defaulted, the Treasury stepped in and guaranteed that debt. After that happened, no investor was willing to put in more money to buffer these losses. So, the Treasury ended up taking them over.

Lehman Brothers Bankruptcy

As an investment bank, Lehman relied on “rollover”funding to finance its investment in real estate, bonds, stocks, etc. All investment banks operate similarly, but when it’s hard for a lender to monitor investments or risk portfolio of the borrower (here, Lehman Bros.), the lender opts for short-term financing. Then, the lender can later threaten to withhold the roll-over financing for the next short-term and keep the borrower in check. As short-sellers became convinced that Lehman’s real estate losses were worse than acknowledged (and as news of the Freddie/Fannie collapse was announced), Lehman’s costs of borrowing rose and its share price plummeted. As a result, Lehman’s credit rating was going to be downgraded, which would have prevented certain firms from continuing to lend to Lehman. Other firms who might have been able to lend, even with the lower credit rating, simply concluded that the risk of default was too high – and so, Lehman’s money ran out.

AIG Bailout

Part of AIG’s business was dealt with a kind of derivative called a credit default swap, or CDS. CDS is like an insurance contact where the buyer pays a premium to the seller (here, AIG) for protection against a default on a package of debt backed by, let’s say….residential mortgages. For a while, AIG was writing a lot of these kinds of contracts because the risk of payout was low and the premiums were an easy profit. As the subprime mortgage market went in the tank, the possibility of further losses caused credit rating agencies to downgrade AIG’s debt. With this lower rating, AIG’s existing contracts compelled them to post that they had sufficient collateral to service the contracts (somewhere around $15 billion in immediate collateral). If AIG could not post the collateral, it would have been considered that AIG defaulted on the CDS’s and that would have called into play cross-default provisions on some of AIG’s other contracts. AIG had about $380 billion in these other types of insurance contracts. No private investors were willing to loan AIG the money it needed to post the collateral. Even if it could post that collateral with current holdings, it would have called into question AIG’s ability to service its own existing debt – which was about $160 billion in bonds held all over the world.

Given the number of intertwined parties and industries, the Federal Reserve decided that a default by AIG would have a catastrophic domino effect on the financial system and cause contagious failures. So, the Fed loaned AIG the $85 billion it needed to post as collateral to honor its contracts.


It pays to learn the ABCs of FDIC

The old line among parents of teens – It’s 9 p.m.; do you know where your children are? – has a replacement these days. In the wake of the recent failure of a few banks (including a high-profile closure in Southern California), the pressing question may soon be: It’s 2008; do you know where your bank accounts are and whether they’re fully FDIC insured?

Of course, for the unwitting consumers who found out this summer that some of their bank-held funds exceeded Federal Deposit Insurance Corp.’s limits, or didn’t meet requirements for full coverage, the failures are no joking matter. And several frustrated readers have indicated in recent weeks their questions have been either "inadequately addressed or not answered at all" by bank personnel.

This mayhem has spawned a fair amount of confusion about precisely what the coverage limits are. In fact, consumers have either less or more to worry about than they think, depending on how their accounts are owned.

Why? FDIC insurance isn’t merely a matter of how much cash is stashed in that checking or savings or money market account. If it’s $100,000 or less, there’s a pretty good chance that the account holder will be OK if a bank failure occurs. But not necessarily, if there are multiple accounts or certain account-ownership arrangements.

Here’s the basic scoop:

The coverage of deposits up to $100,000 is predicated on who owns the account and how many accounts a person has in one institution.

Deposits in a single account set up in the traditional fashion, as an individual account, are covered up to $100,000, provided that’s the individual’s only account at that institution. For instance, if Tom has $81,000 in a savings account and $6,000 in his checking account, if the bank goes under, he’s covered.

But what if Tom has two accounts in the same bank – the single savings account plus a $120,000 certificate of deposit on which his wife, Sandy, is a joint account owner? In that situation, because Tom owns half of the CD, $60,000, that amount combined with his $87,000, means that up to $47,000 might not be covered because that sum exceeds the $100,000 per-person/per-institution limit. However, had he and Sandy legally jointly owned the savings and checking account, a total of $200,000 would be covered, leaving $7,000 uninsured.

That’s a relatively uncomplicated scenario. When businesses own several bank accounts, or a trust account with a balance much larger than $100,000 is housed in a single institution, the situation changes.

Regarding business accounts, owners cannot split a $300,000 sum into three separate accounts for the sole purpose of obtaining full FDIC coverage for each. Regulations stipulate that multiple corporate-owned accounts each must have an independent activity or purpose to qualify for $100,000 per-account insurance coverage. However, each owner can have a separate personal account insured up to $100,000. The owner of a sole proprietorship will not have her business accounts treated separately from her other personal accounts in the same institution for coverage purposes. If the total deposits in all accounts exceed the per-individual limit, the overage is not insured.

For a family living trust set up by parents to benefit their children, FDIC coverage is structured per individual, not per account. As such, if Tom and his four brothers were joint beneficiaries of a $500,000 family trust account, each brother’s share would qualify for full $100,000 coverage. But if each brother was an equal beneficiary of a $750,000 trust account, and the bank failed, $50,000 for each brother would be at risk.

To avoid that eventuality, Tom’s family should set up a separate account of $250,000 at a different FDIC insured bank, not a branch of the same bank.

In general, it’s a good move to split up significant sums. For example, a couple with $1.3 million in a half-dozen accounts at two institutions should instead distribute the money among several accounts and institutions, despite the hassle factor. Often as parents age, their children produce grandchildren who can be included as beneficiaries in family trusts, thereby expanding the insurance coverage for each.

Finally, for those worried about retirement accounts such as self-directed 401(k)s, IRAs and Keoghs, coverage is up to $250,000 per account. Other types of accounts such as 403(b)s don’t receive such preferential coverage, so individuals with large sums of retirement funds in a single institution should consult with the bank and financial advisers.

For detailed FDIC insurance coverage calculation, go online to www.fdic.gov/edie or call toll free 877-275-3342.

SOURCE: DailyBreeze.com in an article written by Stephanie Enright, Moneywise