FDIC Insurance and Revocable Living Trusts: What Ohio Families Need to Know
When you create a revocable living trust, it’s common to title your bank accounts in the name of the trust. But how does that affect FDIC insurance coverage?
At Ison Law, we regularly help Ohio clients ensure that their estate plans—including trust-owned bank accounts—are protected. Here’s what you need to know for 2025 and beyond.
What Is FDIC Insurance?
The Federal Deposit Insurance Corporation (FDIC) protects depositors by insuring bank accounts up to $250,000 per depositor, per insured bank, per ownership category. This includes checking accounts, savings accounts, money market deposit accounts, and CDs at FDIC-insured institutions.
When an account is held in the name of a revocable living trust, the way coverage is calculated changes—depending on how many qualified beneficiaries the trust names.
Trust Accounts and FDIC Coverage Limits
Coverage Up to $250,000 Per Beneficiary
FDIC insurance covers revocable trust accounts up to $250,000 for each qualifying beneficiary, per account owner, per insured bank. For full coverage:
- The trust must be revocable (most living trusts are).
- Beneficiaries must be natural persons, charities, or nonprofit organizations.
- Beneficiaries must be specifically named in the trust document.
Example:
If a single grantor names three children as beneficiaries in a revocable trust and holds $750,000 in a single bank account titled to the trust, the entire balance is insured—$250,000 for each of the three named beneficiaries.
Each Bank Is a Separate Coverage Bucket
FDIC coverage applies separately at each insured bank. So if your trust assets exceed the insured limits at one bank, opening accounts at multiple FDIC-insured banks can expand your coverage.
Mistakes That Can Limit Coverage
Even a properly created trust may not receive full FDIC protection if the account setup doesn’t follow the rules. Common issues include:
Accounts Aren’t Properly Titled
To qualify for trust-based coverage, accounts must be clearly titled in the name of the trust. For example: “Jane Smith Revocable Living Trust”. If the title is missing or unclear, the account might be treated as a personal account—capped at $250,000 total.
Beneficiaries Aren’t Clearly Identified
Terms like “my heirs” or “as decided by the trustee” are not specific enough. FDIC requires clearly named beneficiaries to apply the full per-beneficiary coverage.
More Than 5 Beneficiaries Without Review
If your trust lists more than five beneficiaries, FDIC applies a more complex calculation, which may reduce total coverage. A review by your estate planning attorney can help avoid issues.
How to Maximize FDIC Protection in a Trust
To help ensure your trust-owned accounts receive the full protection they’re entitled to:
- Review your trust to ensure all beneficiaries are eligible and clearly named.
- Check how accounts are titled at each bank to reflect trust ownership.
- Consider spreading large balances across multiple banks if needed.
- Consult with your estate planning attorney to align your legal documents with FDIC rules and asset protection goals.
Work With Experienced Estate Planning Attorneys in Ohio
At Ison Law in Powell, Ohio, we’ve spent over 40 years helping families protect their wealth and legacy. Whether you’re setting up a new trust or want to review how your existing estate plan interacts with FDIC insurance, we’re here to help.
Contact us today to schedule your estate plan review and ensure your accounts are protected—now and for the future.