NCUSIF Insurance of Special Accounts

• What is the insurance coverage on a trust account held under the provisions of an irrevocable express trust?
• What is the insurance coverage on a revocable trust account, a tentative or “Totten” trust account, a “payable-on-death” account, or a qualifying living trust account?
• What is the insurance coverage on a joint revocable trust account?
• Is the interest in a pension or profit sharing account insured any differently than a member’s individual account?
• May a person receive separate insurance on each of several pension or profit sharing plans established by the member’s employer with the same credit union?
• What insurance coverage is provided for traditional IRA, Roth IRA, and Keogh accounts?
• Are accounts held by a person as executor, administrator, guardian, custodian, or in some other similar fiduciary capacity insured separately from his individual account?
• When an account is designated as held by a person as agent for the true owner of the funds, how is the account insured?
• Is an account held by a corporation, partnership, or unincorporated association insured separately from the individual accounts of the stockholders, partners, or members?

What is the insurance coverage on a trust account held under the provisions of an irrevocable express trust?

The trust interest of a beneficiary in a valid irrevocable trust, including Education IRAs, if capable of evaluation in accordance with published rules, is insured up to $100,000 separately from the individual accounts of the settlor (grantor), trustee, or the beneficiary. Either the settlor or the beneficiary must be a member to obtain insurance benefits. All trust interests created by the same settlor (grantor) in the same credit union for the same beneficiary will be added together and insured in the aggregate to the maximum of $100,000.

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What is the insurance coverage on a revocable trust account, a tentative or “Totten” trust account, a “payable-on-death” account, or a qualifying living trust account?

These accounts, or any similar accounts which evidence an intention that the funds shall pass on the death of the owner to a named beneficiary, are considered revocable trust accounts and are insured as a form of individual account. If the beneficiary is a spouse, child, grandchild, parent, brother or sister (whether through blood, adoption or by virtue of remarriage, such as a stepmother) of the owner, the funds in such accounts are insured for the owner up to a total of $100,000 for each such beneficiary separately from any other individual accounts of the owner. If the beneficiary is not one of those listed relatives, the funds in the account are, for insurance purposes, added to any other individual accounts of the owner and insured to a total of $100,000. In the case of a revocable trust account, the person who holds the power of revocation is deemed to be the owner of the funds in the account.

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What is the insurance coverage on a joint revocable trust account?

A joint revocable trust account is a revocable trust account, as described above, that is established by more than one owner and held for the benefit of others, some or all of whom are within the described qualifying degree of kinship. The respective interests of each co-owner held for the benefit of each qualifying beneficiary will be separately insured up to $100,000. The interest of each co-owner will be deemed equal unless otherwise stated in the share account records of the federally-insured credit union. Interests held for non-qualifying beneficiaries will be added to the individual accounts of the co-owners. Where a husband and a wife establish a revocable trust account naming themselves as the sole beneficiaries, the account will not be insured as a joint revocable trust account, but will instead be insured as an ordinary joint account.

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Is the interest in a pension or profit sharing account insured any differently than a member’s individual account?

Yes. For insurance purposes, pension and profit sharing accounts are considered to be trust accounts. The ascertainable interest of each participant (if a member of the credit union) in such account is insured to $100,000 separately from other accounts of the member.

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May a person receive separate insurance on each of several pension or profit sharing plans established by the member’s employer with the same credit union?

No. Except with respect to Individual Retirement Accounts (IRA), Keogh, and Deferred Compensation accounts, if two or more pension plans, or a profit sharing and a pension plan, are established by an employer for the same individual who is a member of the credit union, the beneficiary’s interest in the two accounts will be added together and insured up to $100,000.

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What insurance coverage is provided for traditional IRA, Roth IRA, and Keogh accounts?

Traditional IRA, Roth IRA and Keogh accounts are insured separately to $100,000 from other accounts that the member maintains in the same credit union. However, a member’s Roth IRA will be added together with his or her traditional IRA and insured in the aggregate to the maximum of $100,000. A Keogh account is separately insured from the IRA accounts.

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Are accounts held by a person as executor, administrator, guardian, custodian, or in some other similar fiduciary capacity insured separately from his individual account?

Yes. If the records of the credit union indicate that the person is depositing the funds in a fiduciary capacity, such funds would be separately insured from the fiduciary’s individually owned account. Funds in accounts held by guardians, conservators, or custodians (whether court-appointed or not) are also insured separately from other accounts of the ward.

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When an account is designated as held by a person as agent for the true owner of the funds, how is the account insured?

The account is insured as an account of the principal or true owner. The funds in the account are added to any other individual account owned by the true owner and the total is insured up to a maximum of $100,000.

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Is an account held by a corporation, partnership, or unincorporated association insured separately from the individual accounts of the stockholders, partners, or members?

Yes. If the corporation, partnership, or unincorporated association has obtained membership in the credit union and is engaged in an independent activity, its account is separately insured to a total of $100,000. The term “independent activity” means an activity other than one directed solely at increasing insurance coverage.

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