FDIC & NCUA Insurance With A Single Ownership Account.

Ally6770 | Dec 28, 2017 | 4,307 posts since 2010

I just spoke to NCUA and was told that having beneficiaries in a credit union make it a POD account. You do not have to put POD/ITF in the account title for additional insurance.

Not so in banks she said. The POD/ITF has to be in the account title for additional insurance.

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CTM | Dec 28, 2017 | 179 posts since 2010

The person at the NCUA is wrong.

From my last post on this very subject ---

From the FDIC document, created April 18, 2016, page 66, section IX, paragraph 1
(notice "expressly defined"):

https://www.fdic.gov/deposit/diguidebankers/documents/financial_institution_employees_guide_to_deposit_insurance.pdf

The “title” of a revocable trust account is expressly defined to include the electronic deposit
account records of the IDI. For this purpose, the designation can be as simple as a code in
the IDI’s electronic deposit account records. Accordingly, if an IDI’s electronic records
identify a deposit as a revocable trust account, the account will be insured as such.

Also, from the 2017 version of 12 CFR 331.10 (start reading at "for example, the FDIC"):

https://www.gpo.gov/fdsys/pkg/CFR-2017-title12-vol5/pdf/CFR-2017-title12-vol5.pdf

(b)Required intention and naming of beneficiaries.

(1) The required intention in paragraph (a) of this section that upon the owner's death the funds shall belong to one or more beneficiaries must be manifested in the “title” of the account using commonly accepted terms such as, but not limited to, “in trust for,” “as trustee for,” “payable-on-death to,” or any acronym therefor. For purposes of this requirement, “title” includes the electronic deposit account records of the institution. (For example, the FDIC would recognize an account as a revocable trust account even if the title of the account signature card does not designate the account as a revocable trust account as long as the institution's electronic deposit account records identify (through a code or otherwise) the account as a revocable trust account.) The settlor of a revocable trust shall be presumed to own the funds deposited into the account.

ChasR | Dec 28, 2017 | 287 posts since 2013

CTM--you are correct.

Ally6770 | Dec 28, 2017 | 4,307 posts since 2010

I would get a copy of the electronic deposit account records stating that the account is a revocable trust account. I can only repeat what I was told today.

ChasR | Dec 28, 2017 | 287 posts since 2013

My own view is that, if you can find language in the bank's deposit account agreement, signature card, account receipt or Truth in Lending Act disclosure to the effect that the beneficiary named in an account gets the money if the depositor dies, and the depositor has the legal right to the money while he is alive, you have a record that the account is a "revocable trust account," whether or not the term is used (this is what "or otherwise" means) This is all I look for, but others are entitled to ask for more proof if they feel it necessary.

Ally6770 | Dec 28, 2017 | 4,307 posts since 2010

Here is the written reply---
As we discussed, FDIC requires its insured institutions to but NCUA does not require its insured credit unions to indicate in the title of the account “POD” or “ITF” when an account has named qualifying beneficiaries, in order for the funds in those accounts to be insured as revocable trust accounts. Therefore, at each federally insured credit union, if you have an account(s) that name qualifying beneficiaries, even though the titling of the account(s) does not state “POD” or “ITF”, NCUA will insure the funds in those account(s) under its revocable trust account rules, which is share insurance coverage up to $250,000 for each owner/beneficiary relationship (i.e. the pairing up of each owner to each beneficiary).

As such, the share insurance coverage calculation for an account at a federally insured credit union with 1 owner and 2 named qualifying beneficiaries would be: 1 owner times 2 named qualifying beneficiaries times $250,000 in share insurance coverage (1 x 2 x $250,000), for an insured amount of up to $500,000. Please note, as share insurance coverage of up to $250,000 is for the aggregate of funds associated to each owner/beneficiary relationship, if any other funds exist at this same credit union in a formal revocable trust account or another informal revocable trust account (commonly referred to as a POD or ITF), the funds in those additional revocable trust accounts associated to that owner/beneficiary relationship would be added to the funds in this account for that same owner/beneficiary relationship, in determining the aggregate amount of funds existing at that credit union for that owner/beneficiary relationship -- and the aggregate of all those funds, for the pairing up of that owner to that beneficiary, would be insured up to $250,000.

Please let me know if you have any other questions. Also, it was a pleasure talking with you -- have a very nice day and Happy New Year to you too.

me1004 | Dec 29, 2017 | 1,381 posts since 2010

Two points:

AQlly6770, I have the same understanding as you, I have been told the same about NCUA (specifically from XCEL FCU). CTM, your posted FDIC rule is for FDIC, not NCUA. NCUA has its own insurance and policy for money held by credit unions, it is not involved with the FDIC.

Secondly, I guess it is in another thread on this issue, I gave a full explanation. But I will only make the point here: And the bottom line point is that CTM, I think your explanation of "title" is correct, as I explained probably too detailed and extensively in another thread. As I read that FDIC rule, if does or certainly can be read as saying that the "title" includes all the account documents. So, what most people would consider to be the title is actually merely a "headline," and the title is all the records of the account, which is where you list your beneficiaries but must indicate as a trust or whatever it is if you want extra insurance.

As I said in the other thread, I think the language the FDIC used to explain that is vague and confusing, and as such, maybe people, even banks, have misread it to mean that ITF or POD or whatever designation must be in the "headline." The FDIC should clear up the language.

Bozo | Dec 29, 2017 | 1,375 posts since 2011

I have read (and heard, from CSRs over the phone and in e-mails) so many conflicting accounts, my head is spinning. Can we all agree on one thing? If an account is titled "Jim POD Jane", under either NCUA rules or FDIC rules, it will have 2 X $250,000 insurance?

CTM | Dec 29, 2017 | 179 posts since 2010

Absolutely not. It has $ 250K coverage.

I don't know why anyone would trust the "opinion" of a CSR over the tools provided by the FDIC or NCUA.

Plug your scenario (single owner (person, living), single beneficiary (person, living), $ 500K in deposits) into both calculators and they will give you the same answer. $ 250K insured, $ 250K uninsured.

Here is the FDIC calculator: https://www5.fdic.gov/edie/calculator.html

Here is the NCUA calculator: https://www.mycreditunion.gov/estimator/Pages/calculator.aspx

Ricochet | Dec 29, 2017 | 522 posts since 2010

Napkin calculation
Owner alone = 250k
Owner + #1 POD / Beneficiary = 250K
#2 POD / Beneficiary = 250K
Owner not considered.

me1004 | Dec 29, 2017 | 1,381 posts since 2010

Agreed. No, that one beneficiary would not double your insurance -- and the titling is not the issue in that. You need TWO beneficiaries to double the insurance, one gets you no more than you have without any. But the second or subsequent beneficiary does not have to be on the same account, just at the same institution.

However, to your point, yes, listing them in the manner you noted in what I'm calling the "headline" will meet the requirement. In fact, their names are note even required there, can be elsewhere, you can list merely POD. But as we are believing, the POD titling can be listed elsewhere in the materials, but in the headline is fine.

Yes, the CSRs will often, maybe even the majority of the time, give you the wrong information -- few know what they are talking about.

Ally6770 | Dec 29, 2017 | 4,307 posts since 2010

My accounts in banks will continue to be under $250,000 unless they give me printed proof that the account is POD/ITF. My accounts in credit unions are over $250,000 in a few cases, but I have 2 beneficiaries on all the accounts.

RJM_Willy12 | Jan 11, 2018 | 149 posts since 2016

I have had two officers at two different banks give wrong information. One thought increasing the beneficiaries of an IRA would increase coverage, and she had talked about how she frequently used the FDIC insurance calculator to be certain. So even well intentioned people can be flat wrong.

I don't trust POD type accounts. I don't care if the bank claims it is compliant, if the insurance becomes an issue, the bank is already bankrupt and their guarantee is worthless.

Kaight | Jan 11, 2018 | 1,192 posts since 2011

I agree with various individuals here who are uncomfortable with the POD, ITF, etc., thing. It is burdensome, I admit. But I nevertheless work hard to keep all accounts south of $250,000. By so doing one removes all doubt regarding insurance. And where ownership upon death is concerned, wills or trusts can see to that.

me1004 | Jan 11, 2018 | 1,381 posts since 2010

Well, yes, except the approach via a will will be mixed up in the delays and costs and effort of probate, whereas a POD or ITF, which are trusts, is not. And outside trusts will be more complicated than a simple POD or ITF, and not all financial institutions will deal with them.

That is, extra FDIC or NCUA insurance is not the only reason to use a POD, that just was one point in the discussion.

Ally6770 | Jan 11, 2018 | 4,307 posts since 2010

There is no reason why we would have to go through a will or a trust unless it is needed for special situations. Why should we go through the extra expense and make our estate go through the extra expense of probate when it is not needed?

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