Fiduciaries (receivers, trustees, custodians, referees, etc.) are usually required to maintain their deposits in federally insured accounts, but as of January 1, 2013, the FDIC stopped insuring bank deposits in excess of $250,000 for any one individual or corporate entity (usually determined by social security or taxpayer id number) regardless of whether the accounts are interest bearing or not (the FDIC web site has all the specifics at http://www.fdic.gov/deposit/). So, what should a fiduciary do when holding in excess of $250,000? Well, there are a number of ways to obtain full FDIC insurance on amounts over $250,000.

The two most common programs are the Insured Cash Sweep Service, commonly referred to as an ICS account (www.insuredcashsweep.com), and the Certificate of Deposit Account Registry Service, commonly referred to as a CDARS account (www.cdars.com). The interest rate floats and is really low (currently +/- 0.15%), but it is all FDIC insured. You can also outright purchase bank certificates of deposit, but the amounts are frequently limited to a few million dollars, and must be actively managed and rolled over in a brokerage account.

Both the ICS and CDARS programs are a service of Promontory Interfinancial Network, LLC, and accessed through about 3,000 participating banks. However, many banks do not participate, particularly the money center banks, but a list of participating banks is available on the Promontory web sites. Moreover, staff at many banks often do not even know they have the programs, or if they do, are not familiar with the details.

The ICS program is the better of the two in my opinion. The CDARS program requires that deposited funds be committed for minimum periods of at least 30 days or more, and if funds are withdrawn before then, they are subject to interest penalties. The ICS program allows multiple withdrawals each month without penalty, and does not have to be affirmatively rolled over or committed for a minimum period of time. Some banks offer only one of the two programs, so you may need to talk with a number of banks.

*David Wald has been a fiduciary for nearly 20 years as state & federal court Receiver, custodian and referee. His experience covers over $3 billion of real estate and other business assets.