Deposits held in trust accounts (includes client deposit accounts held by professional practices eg. legal, accounting) are protected separately from deposits in other types of accounts. Beneficiaries of trust accounts can receive separate deposit insurance protection, so long as the trust accounts are eligible for protection and that the trustee discloses the interest of each beneficiary on the records of the member bank. This should include the amounts owed to each beneficiary.
Trustee holds multiple accounts for the same beneficiary in the same member institution
All deposits will be added together and protected up to US $100,000.
Example
Leon has two deposit accounts in trust for his daughter in Bank 1.
| Account |
Beneficiary |
Amount (US$) |
| Leon (Trustee) |
Daughter |
60,000 |
| Leon (Trustee) |
Daughter |
60,000 |
|
Total Deposits |
120,000 |
|
Insured Amount (US$) |
100,000 |
|
Unsured Amount (US$) |
20,000 |
Trustee holds several accounts for different beneficiaries in the same member institution
Each account has separate protection of up US $100,000, so long as the interest of each beneficiary is disclosed on the records of the member institution.
Example
Lilian has two deposit accounts in trust for her two daughters in Bank 1.
| Account |
Beneficiary |
Amount (US$) |
Insured Amount (US$) |
Unsured Amount (US$) |
| Lilian (Trustee) |
Daughter 1 |
105,000 |
100,000 |
5,000 |
| Lilian (Trustee) |
Daughter 2 |
110,000 |
100,000 |
10,000 |
|
Total deposits |
215,000 |
200,000 |
15,000 |
The total deposit insurance protection is US $200,000, US $100,000 for Daughter 1 and US $100,000 Daughter 2.
Several trustees hold accounts for the same beneficiary in the same member bank
| Account |
Trustee |
Beneficiary |
Amount (US$) |
Insured Amount (US$) |
Unsured Amount (US$) |
| 1 |
Mike & Co. |
Theodore |
150,000 |
100,000 |
50,000 |
| 2 |
Cliff & Co. |
Theodore |
50,000 |
50,000 |
0 |
| 3 |
Claire & Co. |
Theodore |
90,000 |
90,000 |
0 |
If a trustee holds one account for several beneficiaries and does not disclose the information on the beneficiaries, what happens?
The account will be treated as a normal deposit account held by the trustee and the protection limit of US $100,000 per depositor per member institution would apply.
Example
| Account |
Trustee |
Beneficiary |
Amount (US$) |
Insured Amount (US$) |
| 1 |
Mike & Co. |
Not disclosed |
140,000 |
40,000 |
The account is only protected up to US $100,000.
