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Subject:  Re: Temporary cache of cash Date:  3/17/2000  3:28 PM
Author:  JAFO31 Number:  20194 of 88065

Crosenfield: "Probably you have to visit several banks. However, note that the limit is per account. If you have a spouse or a child that you trust, you could have one account for yourself, one for you and spouse, one for you and child, etc. Or, you can have a savings account and a checking account. Then you can go to a different bank and play the same thing.
Of course you could use a money market fund; these are not insured by FDIC at all, but those mutual fund companies would turn themselves inside out if necessary to avoid the stigma of having "broken the buck"--had a share price other than $1 a share!

jrr7: "Crosenfield, where did you hear this? Every source I've heard states that the limit was per bank. So a savings & checking account wouldn't work.

However, the individual and joint accounts method would work. You also might be able to set up trust accounts: a trust for your wife with you as trustee, a trust for you with your wife as trustee. So you could have 5 accounts at 1 bank. (You, Wife, Joint, and 2 trusts)

But be *VERY* careful about transferring ownership of the funds to another person; there are bound to be tax issues involved."

Crosenfield: "My parents had multiple accounts in the same bank: my father alone, my mother alone, joint account, father with me, mother with my sister. Their attorney and the bank president (friend of my father) said this kept all the accounts FDIC insured."

The aggregation rules for FDIC insurance purposes are more than a little involved, and are not intuitive. It is most definitely not per account!!!! IOW, savings and checking account in same name are insured to 100k, not 200k.

I had occassion to learn in some level of detail the rules during the 1980's S&L crisis. I was fortunate to never have to explain to someone that they were not fully insured, but I had colleagues who had this "pleasure." Often the person had tried to follow the rules, and misunderstood, or had done what a bank employee suggested, but unfortunately, the bank employee was incorrect. That was years ago, so I do not remember the details, and the rules may have changed since then, but it merits some due diligence.

I also reiterate jrr7's alert about tax issues, both gift tax and icome tax. "criser" has posted several posts on the Tax board about potential problems and pitfalls with JTWROS accounts with anyone other than one's spouse. If you are interested, read tax posts numbered:

26235 (summary)

To Crosenfield. In my mind, even the advice of the bank's president (while probably more knowledgeable than many tellers) would merit independent verification, but you also noted that your parents had also discussed the structure with your their attorney; if there were later a problem, they would at least have a malpractice claim against the attorney.

Just my $0.02. Regards, JAFO

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