Revocable and Irrevocable Trust Accounts

FDIC deposit insurance covers trust accounts under two separate ownership categories: Revocable Trust and Irrevocable Trust.

Revocable Trusts

A revocable trust is a deposit account owned by one or more people that designates one or more beneficiaries who will receive the deposits upon the death of the owner(s).

A revocable trust can be revoked, terminated, or changed at any time, at the discretion of the owner(s). The term “owner” means the grantor, settlor, or trustor of the revocable trust.
Revocable trusts can be formal or informal.

When a revocable trust has more than one owner, each owner’s coverage is calculated separately.

Does the trust meet all three of these criteria?

  1. The account title at the bank indicates that the account is a trust using language such as:
  • Formal Revocable Trusts use such terms as:
    • Living Trust
    • Family Trust
  • Informal Revocable Trusts use such terms as
    • Payable on death (POD)
    • Totten trust
    • As trustee for (ATF)
    • In trust for (ITF)
  • Or similar language, including the word trust in the account title.

There is no six-month grace period for the death of a beneficiary for revocable trust deposits.

If there is no substitute beneficiary designated when a primary beneficiary dies, the amount of deposit insurance coverage may decrease for this deposit.

Irrevocable Trusts

An irrevocable trust account is a deposit account titled in the name of an irrevocable trust, for which the owner (grantor/settlor/trustor) contributes deposits or other property to the trust, but gives up all power to cancel or change the trust.

Irrevocable trusts are also established following the death of an owner of a revocable trust, or by statute or judicial order.