Given the failure of Silicon Valley Bank, individuals or business owners who have cash deposits exceeding $250,000 should take this as an opportunity to consider exploring options to extend their Federal Deposit Insurance Corporation (FDIC) insurance coverage.
The FDICis an independent agency of the federal government that provides deposit insurance to protect consumers in case their bank fails. FDIC coverage protects deposits up to $250,000 per depositor, per insured bank, for each “account ownership category.”
One option to extend FDIC insurance coverage on cash deposits exceeding $250,000 is to use a combination of account ownership categories to multiply the $250,000 coverage for each category of account held at an institution. In addition, you may want to establish revocable and irrevocable trusts, which allow for $250,000 of coverage per trust beneficiary.
Another option is to open accounts at multiple FDIC-insured banks. If an individual has deposits exceeding $250,000 in one bank, they can open accounts at other FDIC-insured banks and divide their funds among them to receive FDIC insurance coverage of up to $250,000 per bank.
It is essential to remember that the FDIC insurance limit applies to each depositor's ownership category, not each account. This means that if you have multiple accounts in the same ownership category, such as two individual accounts, the $250,000 FDIC insurance coverage limit will apply to both accounts combined.
If you would like support to determine how to expand your FDIC insurance coverage limits, and protect your assets using trust and other legal vehicles, contact us for a Family Wealth Planning Session. During your Session, we’ll review all of your assets, your family dynamics, and your risks and potential losses to structure your affairs in the most optimal and efficient manner possible for yourself and the people you love.
Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.