In a recent posting, Fivecentnickle.com projected that about 10-20 banks will fail 2013. Geographically, you are more likely to see a failed bank if your bank was in Illinois, California or Florida as you can see in this map. Tennessee, Montana and a few other states had no bank failures since 2008. This map shows the distribution across the US from 2008 – 2011.
So, in reality, your chances of having to worry about a failed bank are 10 or 20 in 7,053 of the FDIC-insured institutions in the US. Even if you did invest in a failed bank, you only have to worry if your account was more than the FDIC limit in any one bank. Here are some FAQs about FDIC insurance:
What is covered by FDIC? Savings, money market deposit accounts and certificates of deposit (CDs)
How much is covered? Up to 100% of the insured amount, including principal and interest
How can I tell if my bank is covered by FDIC? You can call the FDIC at 877-275-3342 or search for your bank at http://www.fdic.gov/deposit/
How much of my deposit is insured? Up to $250,000 per depositor, per insured bank. You may find it easier to go to the FDIC estimator, EDIE, which you can find on-line at EDIE that calculates approximately how much is protected based on how your assets are titled.
What if my money is in a Credit Union? Credit Unions are insured by the NCUSIF, a federal fund similar to the FDIC.
What do you need to do to protect yourself if you are a senior (or you are taking care of the finances for a senior)? Here are a few tips from Attorney Thom Cooper, the found of Cooper, Adel and Associates:
Spread them across different types of investments and institutions. How much should you invest in each? That depends on your overall estate plan goals, your health and your family situation.
Consider insurance or annuities. Insurance companies have insurance in each state similar to FDIC and NCUSIF for annuities and insurance policies. For more information, see NOHLGA which is the nation information site for these funds.
Remember that stock, bonds and mutual funds do not have these types of guarantees. If holding on to your assets is your main concern, these may not be the best investments for you. Seek professional advice.
Be careful about the way in which you title your assets. How your assets are titled can make a difference in how much is protected from probate or from a catastrophic healthcare event that requires long term care.
Be careful about the way you set up your beneficiaries for your assets. Most of us do not want to pay more estate (death) taxes that we must. Your beneficiary designations can make a big difference.
Whatever you do, make a plan and make that plan with a trusted team of professionals. At Cooper, Adel & Associates, we believe that the best way set up your plan is to work with an elder law attorney as the lead on your team of professionals. As Thom always says, “If you don't have a plan, Uncle Sam has a plan for you and it will probably not be a plan you want!”
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