99-9930. Share Insurance and Appendix  

  • [Federal Register Volume 64, Number 77 (Thursday, April 22, 1999)]
    [Rules and Regulations]
    [Pages 19685-19689]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-9930]
    
    
    
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    Federal Register / Vol. 64, No. 77 / Thursday, April 22, 1999 / Rules 
    and Regulations
    
    [[Page 19685]]
    
    
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    NATIONAL CREDIT UNION ADMINISTRATION
    
    12 CFR Part 745
    
    
    Share Insurance and Appendix
    
    AGENCY: National Credit Union Administration (NCUA).
    
    ACTION: Interim final rule with request for comments.
    
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    SUMMARY: This interim rule simplifies NCUA's share insurance 
    regulations on testamentary accounts, frequently referred to as 
    revocable trust accounts or payable on death accounts, and joint 
    ownership accounts. These amendments are similar to those adopted by 
    the Federal Deposit Insurance Corporation (FDIC) for its deposit 
    insurance regulations. The first amendment increases available share 
    insurance coverage on payable on death accounts by adding parents and 
    siblings to the list of relatives for whom a member may receive 
    separate coverage. The second amendment simplifies the method for 
    determining the amount of insured funds a person may have in one or 
    more joint accounts by eliminating the first of two steps used to make 
    such determinations. These amendments are adopted as an interim rule to 
    provide parity between NCUA and FDIC insurance regulations on commonly 
    held accounts, and to aid the public and prevent confusion over the 
    amount of federal insurance available on those accounts.
    
    DATES: Effective April 22, 1999. Comments must be received on or before 
    July 15, 1999.
    
    ADDRESSES: Comments should be directed to Becky Baker, Secretary of the 
    Board. Mail or hand-deliver comments to: National Credit Union 
    Administration, 1775 Duke Street, Alexandria, VA 22314-3428. Fax 
    comments to (703) 518-6319. E-mail comments to boardmail@ncua.gov. 
    Please send comments by one method only.
    
    FOR FURTHER INFORMATION CONTACT: James J. Engel, Deputy General 
    Counsel, at the above address, or telephone: (703) 518-6540.
    
    SUPPLEMENTARY INFORMATION:
    
    A. Background
    
        In accordance with NCUA's regulatory review process, at year end 
    1998, NCUA staff identified part 745 as one of the regulations in need 
    of updating, clarification and simplification. Part 745 was included in 
    NCUA's Semi-Annual Agenda of Regulations that will appear in the April 
    1999, Unified Agenda of Federal Regulatory and Deregulatory Actions 
    published by the Regulatory Information Service Center, GSA. Work on 
    this project is to begin in late summer. However, due to recent deposit 
    insurance rule changes for joint accounts and revocable trust accounts 
    adopted by the Board of Directors of the Federal Deposit Insurance 
    Corporation (FDIC), the NCUA Board believes it is in the public 
    interest to adopt similar changes for two basic reasons. First, the 
    FDIC's recent action to simplify its rules and provide added protection 
    for bank customers warrants similar action by the NCUA Board to 
    maintain parity between the coverage provided by both federal programs. 
    Both revocable trust accounts and joint accounts are types of accounts 
    commonly used by members of the public for the future transfer of 
    ownership of family assets without loss of control during the owner's 
    life. Traditionally, the owners of these accounts have been afforded 
    the same protection through similar Congressionally created federal 
    insurance funds, whether the accounts are maintained in banks or credit 
    unions.
        Second, changes are needed to reduce, and hopefully avoid, 
    confusion about the application of NCUA's insurance rules to these 
    types of accounts, and also to avoid confusion regarding any 
    differences between NCUA insurance on credit union accounts and FDIC 
    insurance on similar accounts at bank and savings associations. The 
    NCUA Board is aware that there is confusion, both on the part of credit 
    union members and credit union employees about the current rules 
    regarding these accounts. This confusion has been brought to the 
    Board's attention through appeals filed under subpart B of part 745. It 
    is especially apparent when family members open several different joint 
    accounts, or joint owners use combinations of joint accounts and 
    revocable trust accounts. The FDIC had noted that its previous joint 
    account and payable on death account rules were frequently 
    misunderstood by bank depositors. It also looked at surveys conducted 
    by public interest research groups that showed that bank employees too 
    shared depositors' confusion. The action taken by FDIC provides needed 
    clarification and simplification for customers of its insured 
    institutions. The same benefits are extended to credit unions and their 
    members by the Board's adoption of this interim rule.
        In order to expedite this process, the Board has chosen to make 
    minimum changes to the existing language of its regulations and not a 
    full scale rewrite or format revision at this time. Further, the NCUA 
    Board has not attempted to duplicate the studies conducted by or 
    reviewed by the FDIC prior to its adoption of the recent final rule. 
    The Board recognizes that its payout experience on revocable trust and 
    joint accounts has not been of the magnitude of that cited by the FDIC.
    
    B. Current Rules
    
    Testamentary Accounts (Revocable Trust Accounts)
    
        These are accounts that evidence an intention on the part of the 
    owner to pass funds on to one or more beneficiaries upon the owner's 
    death. They include payable-on-death accounts (POD accounts), and 
    tentative or ``Totten'' trust accounts. These accounts are insured 
    separately from other accounts of the owner if the beneficiary is a 
    spouse, child or grandchild. There can be more than one beneficiary, 
    and if each beneficiary is either the spouse, a child or grandchild, 
    the account will be insured up to $100,000 for each such beneficiary. 
    For example, if an account is held by a husband ``in trust for'' his 
    wife and three children, the account will be insured for $400,000. This 
    coverage will be separate from any insurance the husband, wife or 
    children may have on their own accounts. For these accounts, insurance 
    is provided on a per beneficiary basis for the spouse,
    
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    child or grandchild. If, however, a credit union member names a parent 
    or sibling as a beneficiary, a common practice particularly for single 
    individuals, then the account will be added to the individual account 
    of the member and insured up to $100,000. There is no per beneficiary 
    protection in that case even though there is a close familial 
    relationship.
        As the FDIC noted, by adding parents and siblings to the list of 
    family members who qualify as beneficiaries for additional coverage, 
    most of the customers who misunderstand the current rules will be 
    protected. The Board believes that same level of protection should be 
    provided to credit union members and, therefore, has adopted a similar 
    amendment. This interim rule also clarifies that the degree of kinship 
    for named beneficiaries includes relationships through blood, adoption, 
    or by virtue of remarriage. FDIC has a similar provision.
    
    Joint Accounts
    
        NCUA's current regulation does not expressly refer to a two step 
    process in determining insurance coverage on joint accounts as did the 
    FDIC's rule. However, where an individual had several joint accounts, 
    some with different joint owners, insurance coverage was determined by 
    applying two subsections. First, under subsection 745.8(d), joint 
    accounts with the same combination of owners are aggregated and insured 
    up to $100,000. Even though there is more than one account, if the 
    owners are the same, the accounts are treated as one account. Then, 
    under subsection 745.8(e), a person's interest in all joint accounts 
    with different combinations of owners joint is aggregated and insured 
    up to $100,000. Thus, NCUA followed the same type of two step process 
    used by the FDIC
        The application of this process results in certain inequities. If a 
    person has ownership interests in several different joint accounts, 
    each with a different combination of joint owners, his or her interest 
    in each of those accounts will be added together and insured to 
    $100,000. The same will be done for each of the other joint owners as 
    well. If instead, that person has one or more joint accounts with the 
    same combination of joint owners, the maximum insurance available to 
    all of those joint owners combined will be limited to $100,000. Thus, 
    in one instance, each joint owner's interest can be insured up to 
    $100,000, while in the other, total coverage on the account is limited 
    to $100,000, notwithstanding the amount of each of the joint owner's 
    interest.
        Through this interim final rule, the Board is taking the same 
    approach to simplify coverage on joint accounts as did the FDIC. It 
    will no longer be necessary to aggregate all joint accounts owned by 
    the same combination of individuals. With this amendment, each person's 
    interest in all qualifying joint accounts will be aggregated and 
    insured to a maximum of $100,000. The rule also eliminates the 
    signature requirement for share certificates, a matter that has 
    presented problems in the past, and for accounts maintained by certain 
    fiduciaries for joint owners as long as the credit union's records 
    reflect that there are joint owners. FDIC has a similar provision.
    
    C. Interim Rule--Amendments
    
        For purposes of this interim rule, the Board has not changed the 
    current format used in part 745. Instead, minor modifications have been 
    made to keep the amendments simple while accomplishing the desired 
    change. It is expected that more substantial changes to part 745 will 
    be made when agency staff undertakes a more comprehensive review of all 
    of its provisions and after receiving comments as a result of this 
    request for comments.
    
    1. Section  745.4
    
        The title of this section has been changed from ``Testamentary 
    Accounts'' to ``Revocable Trust Accounts,'' the section title the FDIC 
    adopted when it issued uniform rules for banks and savings associations 
    previously insured by the former Federal Savings and Loan Insurance 
    Corporation (FSLIC). See 55 FR 20111 (May 15, 1990). This nomenclature 
    will be more reflective of the types of accounts that members will be 
    using in the future and that the Board anticipates will be addressed in 
    subsequent action on part 745. Substantively, this interim rule extends 
    insurance coverage by adding parents and siblings to the list of 
    relatives who may be named as beneficiary on a revocable trust account 
    and for whom per beneficiary insurance coverage will be provided. The 
    rule also adds a new subsection (d) to define the degree of kinship for 
    named beneficiaries to include relationships through blood, adoption, 
    or by virtue of remarriage, such as a step-child or step-sister.
    
    2. Section 745.8  Joint Accounts
    
        This amendment adds language to subsection (a) to provide that a 
    co-owner's interest in all joint accounts will be added together and 
    insured up to a maximum of $100,000. It also removes subsections (d) 
    and (e). These changes eliminate the two step process for determining 
    insurance coverage on joint accounts. Language is also added to 
    subsection (b) to eliminate the signature requirement for share 
    certificates and accounts maintained for joint owners provided the 
    credit union records reflect the nature of the accounts.
    
    D. Request for Comments
    
        This interim rule only affects those provisions in part 745 and the 
    appendix that relate to joint accounts and revocable trust accounts. As 
    noted above, the Board is not amending or proposing any specific 
    amendments to other provisions of Part 745. Also, the Board is not 
    adopting in this interim rule a change similar to that adopted by the 
    FDIC regarding insurance coverage of accounts held by agents or 
    fiduciaries. However, the Board is interested in comments on part 745 
    in its entirety, including style and format and suggestions for 
    simplification or clarification. NCUA currently uses a separate 
    appendix to provide examples of insurance coverage, whereas FDIC 
    provides examples within some of the specific provisions of its rules. 
    Is either format preferable, or should NCUA add an additional appendix 
    with staff interpretations, similar to that used in part 707 for Truth 
    in Savings?
        When reviewing part 745, the Board suggests commenters look to the 
    simplification of deposit insurance rules amendments adopted by the 
    FDIC (63 FR 25750, May 11, 1998; 64 FR 15653, April 1, 1999). Many of 
    those changes, with or without additional modification, may be 
    appropriate for Board consideration. The Board invites comments on how 
    to address insurance on living trusts, or the need for guidance on any 
    account insurance related areas they may be unique to credit unions. Of 
    particular importance are suggestions on ways to make the share 
    insurance regulations more easily understandable to members and 
    employees.
    
    E. Effective Date
    
        Under the Administrative Procedure Act, a substantive rule is to be 
    published 30 days before its effective date unless it meets one of that 
    Act's exceptions. The NCUA Board has determined that this interim rule 
    falls within the ``good cause'' exception of that Act, 5 U.S.C. 553(d), 
    and, therefore, it is made effective immediately upon publication in 
    the Federal Register. ``Good cause'' exists because the rule benefits 
    credit union members and employees by simplifying how to determine the 
    amount of coverage available on commonly used accounts; it increases 
    the amount of coverage that
    
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    is available for the benefit of credit union members; it does not 
    prejudice credit union members or credit unions; and it provides 
    immediate protection for members whose interests might otherwise be 
    jeopardized if an insured credit union were to fail within the normal 
    thirty day delayed effective date period.
    
    Regulatory Procedures
    
    Regulatory Flexibility Act
    
        This interim final rule applies to all federally-insured credit 
    unions but does not impose new reporting, recordkeeping or other 
    compliance requirements on those institutions. Therefore, the Board has 
    determined and certifies that this rule will not have a significant 
    economic impact on a substantial number of small credit unions. 
    Accordingly, the NCUA Board has determined that a Regulatory 
    Flexibility Analysis is not required.
    
    Paperwork Reduction Act
    
        This interim rule does not impose any paperwork requirements and, 
    therefore, no information has been submitted to the Office of 
    Management and Budget.
    
    Executive Order 12612
    
        Although this interim rule applies to federally-insured state-
    chartered credit unions, it has no affect on the regulation of those 
    credit unions.
    
    List of Subjects in 12 CFR Part 745
    
        Credit unions, Pension plans, Share insurance, Trustee.
    
        By the National Credit Union Administration Board, this 15th day 
    of April, 1999.
    Becky Baker,
    Secretary, NCUA Board.
    
        For the reasons stated in the preamble, NCUA amends 12 CFR chapter 
    VII as follows:
    
    PART 745--SHARE INSURANCE AND APPENDIX
    
        1. The authority citation for part 745 is revised to read as 
    follows:
    
        Authority: 12 U.S.C. 1752(5), 1757, 1765, 1766, 1781, 1782, 
    1787, 1789.
    
        2. Section 745.4 is revised to read as follows:
    
    
    Sec. 745.4  Revocable trust accounts.
    
        (a) For purposes of this part, the term ``revocable trust account'' 
    includes a testamentary account, tentative or ``Totten'' trust account, 
    ``payable-on-death'' account, or any similar account which evidences an 
    intention that the funds shall pass on the death of the owner of the 
    funds to a named beneficiary.
        (b) If the named beneficiary of a revocable trust account is a 
    spouse, child, grandchild, parent, brother or sister of the account 
    owner, the account shall be insured up to $100,000 in the aggregate as 
    to each such beneficiary, separately from any other accounts of the 
    owner or beneficiary, regardless of the membership status of the 
    beneficiary.
        (c) If the named beneficiary of a revocable trust account is other 
    than the spouse, child, grandchild, parent, brother or sister of the 
    account owner, the funds in such account shall be added to any 
    individual accounts of the owner and insured up to $100,000 in the 
    aggregate.
        (d) For purposes of this section, the term ``child'' includes the 
    biological, adopted or step-child of the owner; the term ``grandchild'' 
    includes the biological, adopted or step-child of any of the owner's 
    children; the term ``parent'' includes the biological, adoptive or 
    step-parent of the owner; the term ``brother'' includes a full brother, 
    half brother, brother through adoption or step-brother; and the term 
    ``sister'' includes a full sister, half sister, sister through adoption 
    or step-sister.
        3. Section 745.8 is revised to read as follows:
    
    
    Sec. 745.8  Joint ownership accounts.
    
        (a) Separate insurance coverage. Qualifying joint accounts, whether 
    owned as joint tenants with right of survivorship, as tenants by the 
    entireties, as tenants in common, or by husband and wife as community 
    property, shall be insured separately from accounts individually owned 
    by any of the co-owners. The interest of a co-owner in all qualifying 
    joint accounts shall be added together and the total for that co-owner 
    shall be insured up to $100,000.
        (b) Qualifying joint accounts. A joint account is a qualifying 
    joint account if each of the co-owners has personally signed a 
    membership or account signature card and has a right of withdrawal on 
    the same basis as the other co-owners. The signature requirement does 
    not apply to share certificates, or to any accounts maintained by an 
    agent, nominee, guardian, custodian or conservator on behalf of two or 
    more persons if the records of the credit union properly reflect that 
    the account is so maintained.
        (c) Failure to qualify. A joint account that does not meet the 
    requirements for a qualifying joint account shall be treated as owned 
    by the named persons as individuals and the actual ownership interest 
    of each such person in such account shall be added to any other 
    accounts individually owned by such person and insured up to $100,000 
    in the aggregate. An account will not fail to qualify as a joint 
    account if a joint owner is a minor and applicable state law limits or 
    restricts a minor's withdrawal rights.
        (d) Nonmember joint owners. A nonmember may become a joint owner 
    with a member on a joint account with right of survivorship. The 
    nonmember's interest in such accounts will be insured in the same 
    manner as the member joint-owner's interest.
        4. Part B of the Appendix to Part 745 is amended by revising the 
    heading of Part B and first three sentences of the introductory 
    paragraph to read as follows:
    
    Appendix to Part 745--Examples of Insurance Coverage Afforded 
    Accounts in Credit Unions Insured by the National Credit Union 
    Share Insurance Fund
    
    * * * * *
    
    B. Revocable Trust Accounts
    
        The term ``revocable trust account'' includes a testamentary 
    account, tentative or ``Totten'' trust account, ``payable-on-death'' 
    account, or any similar account which evidences an intention that 
    the funds shall pass on the death of the owner of the funds to a 
    named beneficiary. If the named beneficiary is a spouse, child, 
    grandchild, parent, brother or sister (as defined in subsection 
    745.4(d)) of the owner, the funds in all such accounts are insured 
    for the owner up to $100,000 in the aggregate as to each such 
    beneficiary. If the beneficiary of such an account is other than the 
    spouse, child, grandchild, parent, brother or sister of the owner, 
    the funds in the account are, for insurance purposes, added to any 
    other individual (single ownership) accounts of the owner and 
    insured up to $100,000 in the aggregate. * * *
    
        5. Part B of the Appendix to Part 745 is amended by revising 
    Example 2 to read as follows:
    * * * * *
    
    B. Revocable Trust Accounts
    
    * * * * *
    
    Example 2
    
        Question: Member H invests $100,000 in each of four ``payable-
    on-death'' accounts. Under the terms of each account contract, H has 
    the right to withdraw any or all of the funds in the account at any 
    time. Any funds remaining in the account at the time of H's death 
    are to be paid to a named beneficiary. The respective beneficiaries 
    of the four accounts are H's wife, his mother, his brother, and his 
    nephew. H also holds an individual account containing $100,000. What 
    is the insurance coverage?
        Answer: The accounts payable on death to H's wife, mother and 
    brother are each
    
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    separately insured to the $100,000 maximum (Sec. 745.4(b)). The 
    account payable to H's nephew is added to H's individual account and 
    insured to $100,000 in the aggregate, leaving $100,000 uninsured 
    (Sec. 745.4(c)).
    * * * * *
        6. Part F of the Appendix to Part 745 is amended by removing the 
    five introductory paragraphs and adding four introductory paragraphs in 
    their place to read as follows:
    * * * * *
    
    F. Joint Accounts
    
        The interest of a co-owner in all accounts held under any form 
    of joint ownership valid under state law (whether as joint tenants 
    with right of survivorship, tenants by the entireties, tenants in 
    common, or by husband and wife as community property) is insured up 
    to $100,000. This insurance is separate from that afforded 
    individual accounts held by any of the co-owners.
        An account is insured as a joint account only if each of the co-
    owners has personally signed a membership card or an account 
    signature card and possesses the same withdrawal rights as the other 
    co-owners. (The signature requirement does not apply to share 
    certificates, or to any accounts maintained by an agent, nominee, 
    guardian, custodian or conservator on behalf of two or more persons. 
    However, the records of the credit union must show that the account 
    is being maintained for joint owners. There is also another 
    exception in the case of a minor discussed below.) An account owned 
    jointly which does not qualify as a joint account for insurance 
    purposes is insured as if owned by the named persons as individuals. 
    In that case, the actual ownership interest in the account of each 
    person is added to any other accounts individually owned by such 
    person and insured up to $100,000 in the aggregate.
        Any individual, including a minor, may be a co-owner of a joint 
    account. Although, generally, each co-owner must have signed an 
    account signature card and must have the same rights of withdrawal 
    as other co-owners in order for the account to qualify for separate 
    joint account insurance, there is an exception for minors. If state 
    law limits or restricts a minor's withdrawal rights--for example, a 
    minimum age requirement to make a withdrawal--the account will still 
    be insured as a joint account.
        The interests of a co-owner in all joint accounts that qualify 
    for separate insurance coverage are insured up to the $100,000 
    maximum. For insurance purposes, the co-owners of any joint account 
    are deemed to have equal interests in the account, except in the 
    case of a tenancy in common. With a tenancy in common, equal 
    interests are presumed unless otherwise stated on the records of the 
    credit union.
    
        7. Part F of the Appendix to Part 745 is amended by removing 
    Example 6 and by revising Examples 1 through 5(b) to read as follows:
    * * * * *
    
    F. Joint Accounts
    
    * * * * *
    
    Example 1
    
        Question: Members A and B maintain an account as joint tenants 
    with right of survivorship and, in addition, each holds an 
    individual account. Is each account separately insured?
        Answer: If both A and B have signed the membership or signature 
    card and possess equal withdrawal rights with respect to the joint 
    funds, their interests in the joint account are separately insured 
    from their interests in the individual accounts. (Sec. 745.8 (a) and 
    (b).) If the joint account is represented by a share certificate, 
    their individual signatures are not required for that account.
    
    Example 2
    
        Question: Members H and W, husband and wife, reside in a 
    community property state. Each holds an individual account and, in 
    addition, they hold a qualifying joint account. The funds in all 
    three accounts consist of community property. Is each account 
    separately insured?
        Answer: Yes. An account in the individual name of a spouse will 
    be insured up to $100,000 whether the funds consist of community 
    property or separate property of the spouse. A joint account 
    containing community property is separately insured. Thus, community 
    property can be used for individual accounts in the name of each 
    spouse and for a joint account in the name of both spouses. In this 
    example, each individual account is insured up to $100,000 
    (Sec. 745.3(a)(1)), and the interests of both the husband and wife 
    in the joint account are each insured up to $100,000 
    (Sec. 745.8(a)).
    
    Example 3
    
        Question: Two accounts of $100,000 each are held by a member 
    husband and his wife under the following names: John Doe and Mary 
    Doe, husband and wife, as joint tenants with right of survivorship. 
    Mrs. John Doe and John Q. Doe (community property). How much 
    insurance do the husband and wife have?
        Answer: They have $200,000 of insurance. Both the husband and 
    wife are deemed to have a one half interest ($50,000) in each 
    account. (Sec. 745.2(c)(4).) The husband's interest in both accounts 
    would be added together and insured for $100,000. The wife's 
    insurance coverage would be determined the same way. 
    (Sec. 745.8(a).)
    
    Example 4
    
        Question: The following accounts are held by members A, B and C, 
    each of whom has personally executed signature cards for the 
    accounts in which he has an interest. Each co-owner of a joint 
    account possesses the necessary withdrawals rights.
        1. A, as an individual--$100,000.
        2. B, as an individual--$100,000.
        3. C, as an individual--$100,000.
        4. A and B, as joint tenants w/r/o survivorship--$90,000.
        5. A and C, as joint tenants w/r/o survivorship--$90,000.
        6. B and C, as joint tenants w/r/o survivorship--$90,000.
        7. A, B and C, as joint tenants w/r/o survivorship--$90,000.
        What is the insurance coverage?
        Answer: Accounts numbered 1, 2 and 3 are each separately insured 
    for $100,000 as individual accounts held by A, B and C, respectively 
    (Sec. 745.3(a)(1)). The interest of the co-owners of each joint 
    account are deemed equal for insurance purposes (Sec. 745.2(c)(4)). 
    A's interest in accounts numbered 4, 5, and 7 are added together for 
    insurance purposes (Sec. 745.8(e)). Thus, A has an interest of 
    $45,000 in account No. 4, $45,000 in account No. 5 and $30,000 in 
    account No. 7, for a total joint account interest of $120,000, of 
    which $100,000 is insured. The interest of B and C are similarly 
    insured.
    
    Example 5(a)
    
        Question: A, B and C hold accounts as set forth in Example 4. 
    Members A and B are husband and wife; C, their minor child, has 
    failed to sign the signature card for Account No. 7. In Account No. 
    5, according to the terms of the account, C cannot make a withdrawal 
    without A's written consent. (This is not a limitation imposed under 
    state law.) In Account No. 6, the signatures of both B and C are 
    required for withdrawal. A has provided all of the funds for 
    Accounts numbered 5 and 7 and under state law has the entire actual 
    ownership interest in these two accounts. What is the insurance 
    coverage?
        Answer: If any of the co-owners of a joint account have failed 
    to meet any of the joint account requirements, the account is not a 
    qualifying joint account. Instead, the account is treated as if it 
    consisted of commingled individual accounts of each of the co-owners 
    in accordance with his or her actual ownership interest in the 
    funds, as determined under applicable state law. (Sec. 745.8(c).)
        Account No. 5 is not a qualifying joint account because C does 
    not have equal withdrawal rights with A. Based on the terms of the 
    account, C can only make a withdrawal if he has A's written consent. 
    Account No. 7 is not a qualifying joint account because C did not 
    personally sign the signature card. Therefore, all of the funds in 
    Accounts 5 and 7 are treated as individually owned by A and added to 
    A's individual account, Account No. 1. For insurance purposes then, 
    A has $280,000 in one individual account that is insured for 
    $100,000, leaving $180,000 uninsured.
        Account 6 is a qualifying joint account for insurance purposes 
    since each co-owner has the right to withdraw funds on the same 
    basis. Account 4 is also a qualifying joint account. A's interest in 
    Account 4 is insured for $45,000. B's interest of $45,000 in Account 
    4 is added to her interest of $45,000 in Account 6 and insured for 
    $90,000. C's interest in Account 6 is insured for $45,000.
    
    Example 5(b)
    
        Question: Assume the same accounts as Example 5(a) except that, 
    on Account No. 5, C's right to make a withdrawal is limited by state 
    law which precludes a minor from making a withdrawal without the co-
    owner's written consent. What is the insurance coverage?
        Answer: In this situation, Accounts 4, 5, and 6 all qualify as 
    joint accounts. A, B, and
    
    [[Page 19689]]
    
    C will each have $90,000 of insured funds based on: A's interest in 
    Account 4 ($45,000) and 5 ($45,000), B's interest in Accounts 4 
    ($45,000) and 6 ($45,000), and C's interest in Accounts 5 ($45,000) 
    and 6 ($45,000). As in Example 5(a), Account No. 7 does not qualify 
    as a joint account and would be added to A's individual account for 
    insurance purposes.
    * * * * *
    [FR Doc. 99-9930 Filed 4-21-99; 8:45 am]
    BILLING CODE 7535-01-U
    
    
    

Document Information

Effective Date:
4/22/1999
Published:
04/22/1999
Department:
National Credit Union Administration
Entry Type:
Rule
Action:
Interim final rule with request for comments.
Document Number:
99-9930
Dates:
Effective April 22, 1999. Comments must be received on or before July 15, 1999.
Pages:
19685-19689 (5 pages)
PDF File:
99-9930.pdf
CFR: (2)
12 CFR 745.4
12 CFR 745.8