A link to an FDIC explanation of insurance coverage for fiduciary accounts

Update:  Unlimited FDIC coverage available for IOLTA Accounts through Dec. 31, 2009

Here is a link to the FDIC’s website at which, as of November 19th, 2008, you should find the following information:

Fiduciary Accounts

17. What are fiduciary accounts?These are deposit accounts owned by one party but held in a fiduciary capacity by another party. Fiduciary relationships may include, but are not limited to, an agent, nominee, guardian, executor, or custodian. Common fiduciary accounts include Uniform Transfers to Minors accounts, escrow accounts, Interest On Lawyer Trust Accounts (IOLTA), and deposit accounts obtained through a broker.

18. What are the FDIC disclosure requirements for fiduciary accounts?The fiduciary nature of the account must be disclosed in the bank’s deposit account records (e.g., “Jane Doe as Custodian for Susie Doe” or “First Real Estate Title Company, Client Escrow Account”). The name and ownership interest of each owner must be ascertainable from the deposit account records of the insured bank or from records maintained by the agent (or by some person or entity that has agreed to maintain records for the agent).Special disclosure rules apply to multi-tiered fiduciary relationships. If an agent pools the deposits of several owners into one account and the disclosure rules are satisfied, the deposits of each owner will be insured as that owner’s deposits.

19.  How does the FDIC insure funds deposited by a fiduciary?Funds deposited by a fiduciary on behalf of one or more persons or entities (the owners) are insured as the deposits of the owners if the fiduciary meets the disclosure requirements for fiduciary accounts. (See no.18.)

20.  Would funds deposited by a fiduciary be insured separately from the owners’ other accounts at the same bank?Funds deposited by a fiduciary on behalf of one or more persons or entities (the owners) would be added to any other deposits of the owners at the same insured bank and the total would be subject to the insurance limit for the applicable ownership category.For example: A broker purchases a CD for $250,000 on a customer’s behalf at ABC Bank in the customer’s name alone and the customer already has a checking account in his or her name alone at that same bank for $15,000. The two accounts would be added together and insured up to a total of $250,000 in the single ownership account category, with $15,000 uninsured.