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ICBA Applauds FDIC Action on Living Trust Accounts

Washington, D.C. (Jan. 13, 2004) - The Independent Community Bankers of America commended the Federal Deposit Insurance Corp. on adoption of a final rule today to clarify and simplify deposit insurance coverage for living trust accounts, which are an increasingly popular estate-planning tool.

"The beauty of the FDIC's action is that they have made coverage of living trusts easier to understand without decreasing the overall level of deposit insurance coverage," said Karen M. Thomas, ICBA director or regulatory affairs. "Thus bank customers are winners on two scores."

As advocated by ICBA, the FDIC clarified that each "qualifying beneficiary" (certain family members) of a living trust account will be covered up to $100,000 regardless of whether there are "defeating contingencies" or conditions the beneficiary must meet to be entitled to trust assets on the account owner's death. The FDIC was also considering an alternative of insuring living trust accounts up to $100,000 per account owner regardless of the number of beneficiaries, which would have reduced coverage.

"Now bankers, customers, and the FDIC can easily determine the extent of deposit insurance coverage without having to perform a legal analysis of the trust document," Thomas noted.

ICBA also applauded the FDIC for eliminating certain burdensome and unnecessary bank record-keeping requirements regarding beneficiaries of living trusts. Rather than imposing additional record-keeping requirements on all banks for all living trust accounts, ICBA had suggested that the necessary information could easily be obtained in those few instances where a bank fails.