What to expect from your failed bank

Fiduciary accounts are protected
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Most fiduciary accounts, which are accounts that are owned by one party but managed by another, are insured by the FDIC up to $250,000. These include escrow accounts; Uniform Transfers to Minors Act, or UTMA, accounts; Interest on Lawyer Trust Accounts, or IOLTA; and brokered accounts.

If you are the beneficial owner of one of these types of fiduciary accounts, you will not be contacted by the FDIC about the bank's failure and transfer of ownership, says Ken Carow, professor of finance and associate dean at the Indiana University Kelley School of Business.

"This is because these accounts are on the failed bank's records in the name of the fiduciary, not the individual owner," he says. "The FDIC does not have access to ownership information, and therefore will not contact individual depositors. It is the responsibility of the broker or other fiduciary to initiate a claim."

With these accounts, you will likely have to wait to find out if the new bank owner will service these accounts or sell them to another entity. Also, "on these accounts, the depositor may need to prove the beneficiaries," says Evans.




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