$350k in CD's -- Want them to be insured

Mar 05, 2008 5 Replies
D

I am most appreciative of the many valid tax ideas I have learned from this newsgroup. Alas, I am not sure if this post is appropriate for this group - I sure do not want to post "incorrectly".



My elderly folks (ages: 84/85) have ~$450K in CD's coming due (now in my mom/dad's name). My Dad is concerned about exceeding the $100k federal insurance limit. He is aware that he can have 2 individual and



1 joint account - thereby insuring at least $300k at his current bank. I also suggested that he consider different banks, $100k maximum at each.

My concern is the avenue that my father is currently contemplating. He wants to create several different CD accounts, along with his children. My parents, along with one of his children would be listed as the owners of each individual CD; with each CD being worth less than $100k. I am not knowledgeable of any possible estate and maybe gift tax issues. I expect that there are other concerns - that I am totally unaware of as well!



Any advice I could provide my folks - before they act - would be most appreciated.



don ---- Posted via Pronews.com - Premium Corporate Usenet News Provider ----

formatting link
offers corporate packages that have access to 100,000+newsgroups


Vote
Twitter Facebook LinkedIn
B

If dad is ok with the kids walking off with his retirement savings ...

There is only a completed gift when/if the kid does take the money out of the CD. Otherwise, the $s will be in the taxable estate when mom and dad pass on.

Different banks is easier.

Vote
Twitter Facebook LinkedIn
B

There's a lot unsaid here that I won't get into (seeking best return, laddering etc.) but a place to start regarding what is insured and how the title to the account might be he's on the right track. A good resource is the FDIC itself, you could start at

formatting link
Not sure if it's been considered BUT: The 100,000 limit is both interest and principal. As these CDs age will the principal + accrued interest go past the limit? There sometimes is a time lag getting your money back out from an institutional failure. Usually doesn't happen because the arrangement is made for some "other" institution to take over the failed bank, but it can happen. The law only says insurance should pay "as soon as possible" and if your money is in that limbo situation, it's NOT gaining interest. Something to consider.

If you're going to help him distribute the money to various places, the best site I've found for rates is

formatting link
There's more but this one, but for me, it's more timely, consistent and a wider information base than the others, but I do use several when I'm trying to place a new CD.

Vote
Twitter Facebook LinkedIn
G

at some level, brokered CDs purchased via your stock broker is even easier. If you have a slef directed account, you can do it all yourself. I prefer to check out the "quality" of each such financial institution via, for example, bankrate.com.

each CD is insured to $100,000.00 as to the issuing bank, and teh whole amount (up to ??? millions) is insured as to the stock broker holding the CDs for you.

as another poster has replied, the $100,000 FDIC limit is both principal and interest, with the principal being the par value, not what you paid for it if above par.

Vote
Twitter Facebook LinkedIn
A

In article , Gil Faver

Vote
Twitter Facebook LinkedIn

Join the Discussion

Have something to add? Share your thoughts — no account required.

Didn't find your answer?

Ask the community — no account required