This page shows FDIC insurance on trust accounts is subject to the number of beneficiaries. Yet a bank will open a trust account given only the number of trustees, not the number of beneficiaries. An account with two trustees and one beneficiary might have $5m in it, a good amount of which the FDIC won't cover. So how does the FDIC actually know the correct grand total amount in all banks it is currently liable for? (I'm guessing they don't really know.)

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The FDIC periodically checks to make sure the bank is accurately accounting for all the deposits in the bank through a compliance Reporting Review

verifies whether the insured institution accurately calculates and reports data upon which the FDIC assesses deposit insurance..... issues a report discussing the institution’s compliance with assessment reporting requirements, the effectiveness of the institution’s documentation, and the institution’s responsiveness throughout the review process.

  • So you're saying the FDIC doesn't actually know how much to insure trust accounts for, since they get their numbers from the bank, and the bank doesn't know how many beneficiaries the trust has? Commented Dec 11, 2012 at 0:06
  • The bank will need to know the beneficiaries so they know how the funds will be distributed after the death of the owner. The designation on the account overrules the will. Here is a document from the FDIC regarding the calculation of coverage there are many examples, and the issue is very complex: fdic.gov/news/news/financial/2012/revocable_trust_seminar.pdf Commented Dec 11, 2012 at 1:07

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