The FDIC insures irrevocable trust bank accounts at $250,000 per eligible beneficiary, counting up to five beneficiaries per trust owner, for a maximum of $1,250,000 at any single bank. Since April 1, 2024, revocable and irrevocable trust deposits sit in one combined “trust accounts” category, so every trust deposit a grantor holds at the same bank is added together before that ceiling is applied. Trust coverage is still separate from the same person’s individual, joint, and retirement accounts at that bank.
The Coverage Formula
The math is simple. Count the eligible beneficiaries named in the trust, multiply by $250,000, and stop at $1,250,000 per owner. A grantor who names three children gets $750,000 in coverage. Name five, and coverage tops out at $1,250,000. Naming a sixth or a tenth beneficiary does not push the number any higher.
The distribution percentages in the trust document have no effect on the calculation. A trust that leaves 90% to one child and 5% each to two others still produces $750,000 in coverage, the same as an equal three-way split. The FDIC counts beneficiaries, not shares.1Federal Deposit Insurance Corporation. Trust Accounts
The rule lives at 12 C.F.R. § 330.10, and the FDIC no longer parses distribution schedules or reversionary interests to determine coverage for irrevocable trusts. Any trust deposit an owner holds runs through the same formula.
Who Counts as an Eligible Beneficiary
Only certain named parties move the coverage number. The FDIC recognizes three categories of eligible beneficiaries:1Federal Deposit Insurance Corporation. Trust Accounts
- Living people (any natural person alive when the bank fails)
- Charitable organizations recognized under the Internal Revenue Code
- Non-profit entities with non-profit status under the Internal Revenue Code
Two named parties are explicitly excluded. The grantor cannot be counted as a beneficiary of their own trust. And anyone who would only receive trust assets after another beneficiary dies — a contingent or successor beneficiary — does not count either.2GovInfo. 12 CFR Part 330 – Deposit Insurance Coverage Only beneficiaries with a present entitlement upon the owner’s death factor into the calculation.
For-profit corporations, LLCs, and other business entities that lack non-profit status are not eligible beneficiaries. Funds allocated to an ineligible entity may fall into a different ownership category, and the coverage picture can shift significantly.
Trusts With More Than One Owner
When a trust has more than one grantor, each owner’s coverage is calculated independently. The formula is: number of owners × number of eligible beneficiaries × $250,000. A married couple who jointly establish an irrevocable trust naming their three children reach $1,500,000 in coverage (2 × 3 × $250,000). Each spouse remains individually capped at $1,250,000, but two owners effectively double the available coverage for the trust.1Federal Deposit Insurance Corporation. Trust Accounts Unless bank records say otherwise, the FDIC assumes owners hold equal shares.
The Aggregation Trap Across Your Trusts
This is where the 2024 change catches people. Because revocable and irrevocable trusts now share one category, the FDIC adds together every trust deposit a single owner holds at the same bank. If you have a revocable living trust and a separate irrevocable trust at the same institution, both naming the same two beneficiaries, coverage is $500,000 total, not $500,000 for each trust.1Federal Deposit Insurance Corporation. Trust Accounts
Beneficiaries are counted only once per owner at a given bank, no matter how many trust agreements name them. If Trust A names your three children and Trust B names two of those same children plus a charity, the FDIC recognizes four unique beneficiaries, not five. Duplicates collapse. Anyone holding both revocable and irrevocable trusts at one bank should map out unique beneficiaries and run the math before assuming full coverage.
All Account Types in the Trust Count Together
Every deposit the trust holds at one bank goes into a single pile for insurance purposes. Checking, savings, money market, and certificates of deposit all count toward the same limit.1Federal Deposit Insurance Corporation. Trust Accounts A trust with $200,000 in savings and $100,000 in a CD has $300,000 in deposits. With one eligible beneficiary, $50,000 of that sits above the coverage line.
Opening a new account type does not create new coverage. A CD is not insured separately just because it has a different account number. The only ways to expand coverage are adding eligible beneficiaries (up to five), spreading deposits across banks, or moving funds into a different ownership category.
Trust Coverage Sits Apart From Your Other Accounts
The FDIC insures deposits across 14 ownership categories, each covered independently.3Federal Deposit Insurance Corporation. General Principles of Insurance Coverage Trust accounts are one category. Single accounts, joint accounts, and certain retirement accounts are others. Personal checking money does not reduce your trust’s coverage at the same bank, and vice versa.
At a single bank, one person could have $250,000 covered in a single account, $500,000 covered in a joint account with a spouse, and $1,250,000 covered through trust deposits naming five beneficiaries. That’s $2,000,000 fully insured at one institution, with nothing exotic beyond careful account titling.3Federal Deposit Insurance Corporation. General Principles of Insurance Coverage To go higher, move deposits to a second insured bank; each bank is a separate coverage environment.
When the Bank Itself Is the Trustee
Different rules apply when an insured bank acts as trustee of an irrevocable trust. Under 12 C.F.R. § 330.12, these deposits fall into their own ownership category, distinct from the trust accounts category at § 330.10.4eCFR. 12 CFR 330.12 – Trust Funds Held in Fiduciary Capacity Coverage runs $250,000 per owner or beneficiary represented, and it sits separately from and in addition to insurance on any other deposits those owners or beneficiaries hold at the bank.
The bank-as-trustee scenario often involves commingled trust funds or pooled investment accounts. The FDIC determines each trust estate’s share from the bank’s allocation records, or, if funds are unallocated, from the estate’s proportional interest in the pool.4eCFR. 12 CFR 330.12 – Trust Funds Held in Fiduciary Capacity If your bank’s trust department manages the trust, your coverage structure may not match the standard formula above.
Titling and Documentation
Proper titling is what makes coverage stick. For an irrevocable trust account to qualify under the trust accounts category, the account title or the bank’s internal records must identify the account as belonging to a trust.1Federal Deposit Insurance Corporation. Trust Accounts Vague account names that omit any trust language can cause problems when the FDIC needs to classify deposits quickly.
Banks are not required to keep copies of trust agreements on file, but the FDIC may request the trust document if the bank fails.1Federal Deposit Insurance Corporation. Trust Accounts Make sure the bank has the trust’s name, the names of all beneficiaries, and any tax identification number associated with the trust. An irrevocable trust typically needs its own Employer Identification Number rather than the grantor’s Social Security number, because the grantor has relinquished control of the assets.
Six-Month Grace Period After a Grantor’s Death
When a trust owner dies, the FDIC provides a six-month grace period during which the original coverage stays intact. The insurance calculation remains what it was before the death, and the grace period cannot reduce coverage.5eCFR. 12 CFR Part 330 – Deposit Insurance Coverage
Once the six months pass, if the account has not been restructured, coverage reverts to the actual ownership arrangement at that point. For an irrevocable trust, that usually means the successor trustee and the remaining beneficiaries drive the new calculation. Use that window to reassess where trust deposits are held and whether balances still fall inside the limits.
If Deposits Exceed the Insured Limit
When a bank fails and a trust holds more than the insured amount, the FDIC pays out the covered portion promptly. For the uninsured balance, the depositor receives a Receiver’s Certificate, which is a claim ticket against the failed bank’s remaining assets.6Federal Deposit Insurance Corporation. Payment to Depositors Holders of a Receiver’s Certificate get paid as the FDIC liquidates the bank’s assets over time. Recovery on uninsured deposits varies with the quality of the failed bank’s portfolio, and the process can stretch out for months or longer.
If Your Trust Is at a Credit Union
Deposits at a federally insured credit union are covered by the National Credit Union Share Insurance Fund, not the FDIC. The NCUA has been operating under older rules that insure each beneficiary’s interest separately, up to $250,000 per beneficiary.7National Credit Union Administration. How Your Accounts Are Insured
Starting December 1, 2026, the NCUA will move to a simplified framework that mirrors the FDIC’s approach: a single trust accounts category covering both revocable and irrevocable trusts, with the same $250,000-per-beneficiary calculation and the same $1,250,000 maximum per owner per credit union.8MyCreditUnion.gov. Trust Rule Fact Sheet: Changes in NCUA Share Insurance Coverage Anyone holding irrevocable trust deposits at a credit union should review the beneficiary structure before that date to confirm balances still fall within insured limits.