Comment letter to the FDIC on Revisions to Insurance Coverage of Revocable Trusts.

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Comment letter to the FDIC on Revisions to Insurance Coverage of Revocable Trusts.

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December 1, 2008 Robert E. Feldman Executive Secretary Attention: Comments Federal Deposit Insurance Corporation th550 17 Street, N.W. Washington, D.C. 20429 Re: Deposit Insurance Regulations: Revocable Trust Accounts (RIN 3064-AD33) Dear Mr. Feldman: 1The Independent Community Bankers of America (ICBA) appreciates the opportunity to offer comments in connection with the FDIC’s proposal to simplify and modernize its deposit insurance rules for revocable trust accounts. Under the proposed interim rules, the concept of qualifying beneficiaries is eliminated and a trust account owner with up to five different beneficiaries named in all his or her revocable trust accounts at one FDIC-2insured institution will be insured up to $100,000 per beneficiary . Revocable trust account owners with more than $500,000 and more than five different beneficiaries named in the trust will be insured for the greater of either: $500,000 or the aggregate amount of all the beneficiaries’ interests in the trusts, limited to $100,000 per beneficiary. ICBA’s Position ICBA agrees with the FDIC that the proposals will make the coverage rules for revocable trust accounts easier to understand and easier to apply, without decreasing coverage currently available for revocable trust account owners. Eliminating the concept of “qualifying beneficiaries”, for instance, which currently is 1The Independent ...

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December 1, 2008

Robert E. Feldman

Executive Secretary

Attention: Comments

Federal Deposit Insurance Corporation

550 17

Street, N.W.

Washington, D.C. 20429

Re: Deposit Insurance Regulations: Revocable Trust Accounts (RIN 3064-AD33)

Dear Mr. Feldman:

The Independent Community Bankers of America (ICBA)

appreciates the opportunity to

offer comments in connection with the FDIC’s proposal to simplify and modernize its

deposit insurance rules for revocable trust accounts.

Under the proposed interim rules,

the concept of qualifying beneficiaries is eliminated and a trust account owner with up to

five different beneficiaries named in all his or her revocable trust accounts at one FDIC-

insured institution will be insured up to $100,000 per beneficiary

. Revocable trust

account owners with more than $500,000 and more than five different beneficiaries

named in the trust will be insured for the greater of either:

$500,000 or the aggregate

amount of all the beneficiaries’ interests in the trusts, limited to $100,000 per beneficiary.

ICBA’s Position

ICBA agrees with the FDIC that the proposals will make the coverage rules for

revocable trust accounts easier to understand and easier to apply, without

decreasing coverage currently available for revocable trust account owners.

Eliminating the concept of “qualifying beneficiaries”, for instance, which currently is

The Independent Community Bankers of America represents nearly 5,000 community banks of all sizes and

charter types throughout the United States

and is dedicated exclusively to representing the interests of the

community banking industry and the communities and customers we serve. ICBA aggregates the power of its

members to provide a voice for community banking interests in Washington, resources to enhance community

bank education and marketability, and profitability options to help community banks compete in an ever-

changing marketplace.

With nearly 5,000 members, representing more than 20,000 locations nationwide and employing nearly

300,000 Americans, ICBA members hold $1 trillion in assets, $800 billion in deposits, and $700 billion in

loans to consumers, small businesses and the agricultural community. For more information, visit ICBA’s

website at www.icba.org.

The insured amount is now $250,000 per beneficiary.

However, this letter refers to the old insured

amounts to make it consistent with the FDIC’s proposal.

defined as the revocable trust account owner’s spouse, children, grandchildren, parents

and siblings, significantly simplifies the coverage rules.

Depositors and bankers no

longer need to know who is a qualifying beneficiary and who is not.

As explained in the

proposal, the changes will obviate the need for FDIC claims agents, upon an institution’s

failure, to confirm that a beneficiary named in a revocable trust account is a qualifying

beneficiary.

This should result in quicker deposit insurance determinations on revocable

trust accounts at institution failures.

ICBA also agrees that one of the most confusing and complex aspects of determining

revocable trust account coverage under the current rules is having to discern and consider

unequal beneficial interests in revocable trusts. Since according to the FDIC, the vast

majority of revocable trust account owners have less than $500,000 in revocable trust

accounts at one FDIC-insured institution, the new rules will simplify the coverage limits.

Under the new rules, coverage for account owner’s revocable trust accounts with less

than $500,000 will be determined simply by multiplying the number of different

beneficiaries named in the trust by $100,000.

In conclusion, since eliminating the concept of qualifying beneficiaries and disregarding

unequal interests in a trust for accounts with five or fewer beneficiaries simplifies the

current coverage rules without decreasing the current coverage for trust accounts, ICBA

supports the proposed interim rule.

ICBA appreciates the opportunity to offer comments in connection with the FDIC’s

proposal to simplify and modernize its deposit insurance rules for revocable trust

accounts. If you have any questions about our letter, please do not hesitate to contact me

at 202-659-8111 or

Chris.Cole@icba.org

Sincerely,

/s/ Christopher Cole

Vice President and Senior

Regulatory Counsel

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