As you know I have been working with FDIC chairman Sheila Bair to help Americans understand that their bank deposits are safe if a few simple rules are followed. (If you haven’t yet checked out the new myfdicinsurance.gov website, what are you waiting for?)

I have to tell you that I have found everyone at the FDIC to be incredibly focused and committed to helping you keep your money safe and sound. It has been so gratifying to work with them, and watch them do such a great job at protecting you and me. But months ago when the FDIC first asked me to work with them on this educational project, I mentioned to Chairman Bair and her team that there was one FDIC rule I found maddening, because it discriminates against same-sex partners as well as individuals who want to leave money to beneficiaries who are not part of their immediate family. Let me explain. 

If you create a revocable living trust account at a bank-also known as Payable on Death (POD) account-the money in the account is insured up to $250,000 (new limit as of October 2008)* per beneficiary, if the beneficiary is a spouse, parent or child. But if the beneficiary was your life partner, or a niece or nephew, or cousin, or just a really great friend, any POD account you had set up for them at a bank wasn’t eligible for the $250,000 (new limit as of October 2008)* insurance coverage that a POD for a spouse, parent or child would have. You could still set up the POD account for any beneficiary, but only accounts that named certain relatives was eligible for FDIC insurance coverage.

Now that has all changed.

Effective immediately, the FDIC has stripped away all the caveats about which POD account beneficiaries are eligible for insurance coverage. The new rule is beautifully simple: Every beneficiary named in a living trust/POD account is eligible for up to $250,000 (new limit as of October 2008)* of insurance coverage. Anyone. Period. Doesn’t matter if you’re legally related or just friends. So just to reiterate: the new rule is $250,000 (new limit as of October 2008)* of insurance coverage per named beneficiary in a living trust/POD account. So for example, if you have four beneficiaries with equal “interest” in your $1,000,000 trust, each beneficiary would be fully insured for their $250,000 (new limit as of October 2008)* share of your estate.

I want to be clear, that is in addition to all your other insured accounts at the bank.

I know we are in the midst of a very difficult time, and I have heard from so many of you how frustrated you are with how Washington is tackling the economic challenges our country faces. But if you ask me, the Board of Directors of the FDIC and the leadership of FDIC Chairman Bair is an example of how Washington can step up the plate and do right for all of us. Job well done.

We are moving in the right direction at least with the FDIC.

Suze

* The FDIC insurance increase to $250,000 is temporary at this point—only valid through DECEMBER 31, 2009.