Up until the present financial upheaval occurring on Wall Street, few people worried about the money they had in the bank. However, with the collapse of many national banks such as Washington Mutual, IndyMac, Wachovia, etc., now would be a good time to review what is insured and what is not.

The Federal Deposit Insurance Corporation (FDIC) provides insurance for deposits in most U.S. banks. This insurance is limited to $100,000 per bank, per depositor. If you have more than one account, you do not get any additional insurance coverage. Your total insurance is limited to $100,000, no matter how many separate accounts you have.

One way out of this problem is using a Living Trust. With a properly written living trust, you can multiply the FDIC amount by the number of beneficiaries under the Trust. For a family with three kids, this means the account will be insured for $500,000. The owner of a living trust account would be insured up to $100,000 per beneficiary if all of the following requirements are met:

1. The beneficiary must be the owner's spouse, child, grandchild, parent or sibling. Stepparents and stepchildren, adopted children and similar relationships also qualify. In-laws, cousins, nieces and nephews, friends, and charitable organizations do not qualify.

2. The beneficiary must become entitled to his or her interest in the trust when the owner dies -- coverage would be based on the beneficiaries who meet this requirement at the time the bank fails.

The nice thing about a living trust is that you can put money in and take money out at any time. If you have any further questions about how to set up a living trust, please contact our office at 303-688-0944 or by email to mike@robinsonandhenry.com.

Robinson & Henry P.C. is a law firm with offices at 900 W. Castleton Rd., Castle Rock, CO 80109.