The Trust Advisor Blog reports that if a trust company is managing assets properly and is FDIC insured, trust clients should be protected if the trust company, which could very well be a bank, later fails. This means that the attorney who referred the client to the bank may not risk liability in such a situation. The attorney could, however, suffer damage to his or her reputation as an advisor and therefore, the attorney should only make referrals to a particular institution after conducting sufficient research.
See Scott Martin, When a Bank Fails, Are Trust Assets at Risk?, The Trust Advisor Blog, March 12, 2010.
