FDIC Insurance and Irrevocable Trusts: What Ohio Families Should Know

When you establish an irrevocable trust, you’re often thinking about long-term asset protection, tax planning, or legacy preservation. But many clients are surprised to learn that FDIC insurance coverage for bank accounts owned by irrevocable trusts is more limited than for revocable living trusts.

At Ison Law, we want to make sure your estate planning strategy works as intended—including protecting the cash in your trust-owned bank accounts. Here’s what you need to know in 2025.

 

How FDIC Insurance Applies to Irrevocable Trusts

Bank accounts owned by irrevocable trusts fall into a separate FDIC ownership category: “irrevocable trust accounts.” The rules for calculating coverage are different—and in many cases, more restrictive—than those for revocable trusts.

 

Basic Rule: $250,000 Per Qualifying Beneficiary

FDIC will insure up to $250,000 per qualifying beneficiary, per insured bank, per grantor—but only if the beneficiary’s interest in the trust is:

  • Non-contingent (the right to receive funds is definite and not subject to conditions)
  • Specifically named in the trust
  • Equal and ascertainable in value

If these criteria are not met, FDIC may limit insurance coverage to just $250,000 total for the entire account, regardless of how many beneficiaries are named.

 

Examples: When Coverage Increases—and When It Doesn’t

✅ Non-Contingent Interests (Full Coverage Available)

The trust says: “Upon my death, each of my three children shall receive $100,000.”

  • Each child is a qualifying beneficiary with a clearly defined interest.
  • FDIC coverage = $750,000 (3 × $250,000)

⚠️ Contingent or Discretionary Interests (Limited Coverage)

The trust says: “Trustee may distribute funds to my grandchildren for their needs, at the trustee’s discretion.”

  • The interests are discretionary and not guaranteed.
  • FDIC coverage = $250,000 total, even if there are multiple named beneficiaries

 

Key Differences from Revocable Trust Accounts

  • Revocable trusts generally get $250,000 in coverage per named beneficiary, regardless of contingency.
  • Irrevocable trusts require non-contingent interests to qualify for per-beneficiary coverage.
  • If the grantor retains any control or benefit in the trust, the FDIC may classify the account under a different ownership category (e.g., individual or joint account), potentially limiting coverage even further.

 

Tips to Maximize FDIC Protection for Trust-Owned Accounts

If you have—or are setting up—an irrevocable trust and want to ensure your assets are protected:

  • ✅ Have your trust reviewed to confirm whether each beneficiary’s interest qualifies as “non-contingent.”
  • ✅ Title accounts correctly to show the trust as the account owner.
  • ✅ Keep clear trust records available for your bank and fiduciaries.
  • ✅ Spread funds across multiple FDIC-insured banks if necessary to stay within coverage limits.

 

Work With Experienced Ohio Estate Planning Attorneys

At Ison Law in Powell, Ohio, we’ve been helping families protect their assets and plan for the future for over 35 years. If you’re unsure whether your irrevocable trust accounts are properly protected—or need help designing a trust strategy that works with FDIC rules—we’re here to help.

Contact us today to schedule a consultation and ensure your trust and financial assets are secure, now and for generations to come.