Bank failures can be devastating to depositors, especially those with large sums of money at risk. While the Federal Deposit Insurance Corporation (FDIC) provides insurance coverage for bank deposits up to $250,000 per depositor, per insured bank, there are steps that depositors can take to further protect their money. One such step is to consult with an attorney who specializes in banking law. Here’s how an attorney can help protect a person’s money from a bank failure.
- Conduct a Risk Assessment
An attorney can assess the risk associated with a depositor’s accounts and recommend strategies for minimizing that risk. For example, an attorney may recommend that the depositor spread their deposits across multiple banks to ensure that all deposits are fully insured by the FDIC. Alternatively, an attorney may recommend investing in different types of accounts, such as CDs or money market accounts, that are insured separately by the FDIC.
- Review Account Agreements
An attorney can review the account agreements to ensure that the depositor understands the terms and conditions of their accounts. The attorney can help the depositor identify any risks or potential liabilities associated with their accounts, such as early withdrawal penalties or fees.
- Analyze Deposit Insurance Coverage
An attorney can analyze the depositor’s accounts to determine their FDIC insurance coverage. If the depositor has accounts that exceed the FDIC insurance limit, an attorney can recommend strategies for reducing the risk of loss, such as transferring funds to a spouse or other family member’s account, or setting up a trust.
- Review Bankruptcy and Insolvency Laws
An attorney can review bankruptcy and insolvency laws to ensure that the depositor understands their rights in the event of a bank failure. The attorney can advise the depositor on how to file a claim with the FDIC, or how to participate in any bankruptcy proceedings related to the failed bank.
- Monitor Bank Health
An attorney can monitor the health of the depositor’s bank to ensure that it remains financially sound. The attorney can review the bank’s financial statements and regulatory reports to identify any potential risks or red flags. If the attorney determines that the bank is at risk of failure, they can advise the depositor on how to withdraw their funds or transfer them to a safer institution.
In conclusion, consulting with an attorney who specializes in banking law can help protect a person’s money from a bank failure. An attorney can conduct a risk assessment, review account agreements, analyze deposit insurance coverage, review bankruptcy and insolvency laws, and monitor bank health to help the depositor minimize their risk of loss. While the FDIC provides insurance coverage for bank deposits, an attorney can provide additional protection and peace of mind to depositors who are concerned about the safety of their money.