CUNA Regulatory Comment Call

May 26, 1999

NCUA's Share Insurance Coverage Proposal


The NCUA Board adopted an interim final rule to simplify the share insurance regulations on revocable trust accounts and joint ownership accounts. The rule was effective on April 22, 1999 and contains a request for comments on other aspects of Part 745 of NCUA’s rules regarding share insurance, which will be the subject of a comprehensive review later this year.

Comments are due no later than July 15, 1999, but please have your comments to CUNA by July 8. Please feel free to fax your responses to CUNA at 202-371-8240; e-mail them to CUNA’s Assistant General Counsel Jeffrey Bloch at; or mail them to Jeffrey in c/o CUNA’s Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005. You may also contact us if you would like a copy of the proposed rule.


Both revocable trust accounts and joint ownership accounts are types of accounts commonly used by members for the transfer of ownership of family assets, without loss of control during the owner’s life. "Revocable trust account" includes a testamentary account, tentative or "Totten" trust account, "payable-on-death" account, or any similar account that evidences the owner’s intention that the funds will pass to one or more named beneficiaries.

The interim final rule is intended to eliminate the confusion that credit union employees and members have regarding the amount of insurance coverage available on revocable trust accounts and joint ownership accounts. The rule parallels actions recently taken by the Federal Deposit Insurance Corporation (FDIC) in its regulations governing insurance on these types of accounts.

Interim Final Rule

Upon the owner’s death, revocable trust accounts are insured separately if the beneficiary is a spouse, child or grandchild. Under the interim final rule, such accounts will also be insured separately if the beneficiary is a parent or a sibling. This means each of these relatives, as beneficiaries, will now have share insurance up to $100,000 on such accounts, which will be separate from any insurance these individuals may have on their own accounts at the credit union. The interim final rule also clarifies that the degree of kinship for named beneficiaries includes relationships through blood, adoption or by virtue of remarriage.

With regard to joint accounts, each person’s interest in all joint accounts will be aggregated and insured to a maximum of $100,000. There will no longer be distinctions drawn between accounts with the same combination of joint owners and accounts with a different combination of joint owners. The interim final rule also eliminates the signature requirement for share certificates and for accounts maintained by certain fiduciaries for joint owners, as long as the credit union’s records reflect the nature of the accounts.

Request for Comments

The NCUA Board is interested in receiving comments on Part 745 in its entirety, including style, format and suggestions for simplification. Specifically, the Board is seeking comments on whether examples of insurance coverage should be placed in a separate appendix, within specific provisions of the rules or in an additional appendix with staff interpretations, similar to that used in Part 707 for Truth-in-Savings.

The Board also suggests that commenters review the simplification of the deposit rules as adopted by the FDIC to determine if those changes are also appropriate for Board consideration. These FDIC deposit rules mirror the substantive provisions of the NCUA interim final rule. They also contain substantive amendments that relax recordkeeping requirements for certain agency or fiduciary accounts, create a six-month "grace period" following the death of a depositor for the restructuring of accounts in order to maintain current levels of deposit insurance, and clarify that a "defeating contingency" in a living trust agreement will prevent the account from receiving separate insurance coverage. Please contact Jeffrey Bloch at CUNA if you would like a copy of the FDIC rules or have questions about them.

The Board is also interested in receiving comments on how to address insurance on living trusts and on insurance issues unique to credit unions. The Board is particularly interested in receiving suggestions on how the insurance rules can be written so as to be more easily understandable by members and credit union employees.

Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •