Fiduciary accounts include, but are not limited to:
- Uniform Transfer to Minors Act (UTMA) accounts (Also known as Uniform Gift to Minors Act or UGMA accounts)
- Accounts with a power of attorney
- Decedent estate accounts
- Real estate and other escrow accounts
- Mortgage servicing accounts
- Interest on lawyer trust accounts (IOLTA)
- Brokered deposits
Funds deposited by a fiduciary on behalf of one or more principals are insured as the funds of the principal (the actual owner) to the same extent as if the funds were deposited directly by the principal, provided all of the following requirements are met:
- The fiduciary nature of the account must be disclosed in the account title.
- The identities and the interests of the principals for whom the fiduciary is acting must be ascertainable from either the deposit account records of the bank, or records maintained in good faith and in the regular course of business by the depositor or by some person or entity that had undertaken to maintain such records for the depositor.
Disclosure Requirements for Multi-Tier Fiduciary Accounts
Fiduciary accounts may involve multiple levels of relationships. For example, one agent may hold funds as nominee for another agent who in turn holds the funds as an agent for a third party, who in turn is an agent for a fourth party. For deposit accounts that involve multiple levels of fiduciary relationships, there are two ways to satisfy the FDIC's disclosure rules:
Option 1:
- Indicate on the deposit account records the existence of each and every level of the fiduciary relationship; and
- Identify, at each level, the name and interests of the entity on whose behalf the party at each level is acting.
Option 2:
- Indicate on the deposit account records that the depositor is acting in a fiduciary capacity on behalf of certain persons or entities who may, in turn, be acting in a fiduciary capacity for others; and
- Indicate the existence of additional levels of fiduciary relationships in records maintained in good faith and in the normal course of business by parties at subsequent levels; and
- Indicate at each of the levels the names and interests of the persons on whose behalf the party at that level is acting.
No person or entity in the chain of parties will be permitted to claim that they are acting in a fiduciary capacity for others unless the possible existence of such a relationship is revealed at some previous level in the chain.
Failure to Meet
Disclosure Requirements
Failure to meet the disclosure requirements will result in the deposits being insured as the funds of the fiduciary in either the single account or corporate account category. These deposits will then be added to any other funds the fiduciary may hold in the same ownership category at the same bank, and the total will be insured up to $100,000.