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Washington
NCUA to consider revocable trust coverage
WASHINGTON (9/29/08)—The National Credit Union Administration (NCUA) is looking into simplifying its rules used to determine insurance coverage for revocable trust accounts. Specifically, the agency may be investigating the definition of “qualifying beneficiary” used for these accounts, known commonly as payable-on-death accounts. Just last week, the Federal Deposit Insurance Corp. (FDIC) announced changes to its coverage rules for the revocable trusts. The agency announced an interim rule, effective immediately, that eliminated the concept of qualifying beneficiaries, so that coverage is based on the naming of virtually any beneficiary. Under the revised FDIC rules, coverage for the vast majority of account owners at FDIC-insured banks is now based on the number of beneficiaries named in a depositor's revocable trust account or accounts. In as release, the FDIC noted that the insurance limit will still be based on $100,000 per named beneficiary. And for revocable trust account owners with more than $500,000 in such accounts naming more than five beneficiaries, the coverage is the greater of either $500,000 or the sum of all the named beneficiaries' proportional interest in the trusts, limited to $100,000 per different beneficiary. "We believe the interim rule will not only result in faster deposit insurance determinations after bank closings, but will help improve public confidence in the banking system," said FDIC Chairman Sheila Bair.


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