The news of Washington Mutual and other bank failures recently has increased interest in the topic of FDIC insurance. Consider the following when structuring accounts to secure maximum FDIC coverage. 
The FDIC insures deposits at insured banks including checking, NOW and savings accounts, money market accounts, and certificates of deposit (CDs). FDIC does not insure stocks, bonds, mutual funds, ETF's, life insurance policies, annuities, or municipal securities purchased from an insured bank. SIPC (Securities Investor Protection Corporation) protects brokerage accounts up to $500,000 per customer if the brokerage firm fails. Speak to your brokerage firm about SIPC rules they are different from FDIC rules. See www.sipc.org.
FDIC will cover deposits, dollar for dollar, including principal and any accrued interest, up to the insurance limit. To find out whether the FDIC insures your bank or savings association, see www.fdic.gov/deposit/index.html and use 'Bank Find'.
The basic amount insured by FDIC is $100,000 per depositor per insured bank. Certain retirement accounts, such as IRAs, may be insured up to $250,000 per depositor per insured bank. You can increase the FDIC insured available holding accounts in different types of ownership.
Joint accounts provide $100,000 of coverage for each joint owner, provided both owners have equal rights to withdraw funds from the account. Each person's shares of all joint accounts at the same insured bank are added together, and the total is insured up to $100,000.
The FDIC treats assets owned by revocable living trusts the same as individual assets. If all assets are in the trust, coverage will be up to $100,000 (or $200,000 for married couples). If you require more coverage, and meet the requirements, you can expand the coverage up to $100,000 per qualifying beneficiary (based on the actual interests of each qualifying beneficiary). Coverage for trusts with more than one grantor (as in a joint trust for husband and wife), can be expanded up to $100,000 per qualifying beneficiary for each grantor, provided the beneficiary is entitled to receive the trust assets when the last grantor dies. (For example, in a joint trust that provides that upon the death of the first grantor-spouse the funds pass to the surviving grantor-spouse. Then on the death of the surviving grantor-spouse the funds pass to their three children equally. The FDIC insures the trust's deposit account up to $600,000.)
For the owner (grantor) of a living trust account to be insured up to $100,000 per beneficiary, all the following requirements must be met:
The beneficiary is the owner's spouse, child, grandchild, parent, or sibling. Adopted and stepchildren, grandchildren, parents, and siblings also qualify. In-laws, grandparents, great-grandchildren, cousins, nieces and nephews, friends, organizations (including charities), and trusts do not qualify.
The account title must point out the existence of the trust relationship by including a term such as payable on death, in trust for, trust, living trust, family trust, or an acronym such as POD or ITF.
For POD accounts, each beneficiary must be identified by name in the bank's account records.
Failure to meet any of the requirements will compromise the coverage provided by the FDIC. See www.fdic.gov/deposit/deposits/insuringdeposits/ for more information, examples, and common mistakes when calculating coverage for revocable trust accounts.
