Insurance With Money In Credit Unions.

Ally6770 | Mar 14, 2023 | 4,310 posts since 2010

I spoke to the NCUA today and once you put a beneficiary on your account it makes it a Totten Trust.

So one beneficiary and the account has $250,000 insurance and 2 the insurance goes up to $500,000. If only one savings, CD account etc. is over $250,000 and up to $500,000 it is completely covered by the NCUA insurance. If it is over that amount with the same beneficiaries then get some into another institution.

I assume banks are the same now as the calculators seem to be the same. Years ago POD/ITF had to be on the title of the account. Not sure about now. But POD/ITF have different rules for dispersement or they use to.

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me1004 | Mar 14, 2023 | 1,381 posts since 2010

Turns out, the "title" is not merely the headline name of the account, it is a broader document with lots of info about the trust, and yes, that does need to name the beneficiary. Kind of like the title to real estate isn't just the headline on the paperwork.

The rest you say is correct. One beneficiary does not get you extra insurance, the second one does. But to clarify, it is $250,000 per beneficiary on everything you have on deposit with that finanical institution, not separately for each account you have with them.

I have never heard of different rules for dispersement. Once you're dead, the beneficiaries are entitled to the money, naming them makes the account a trust account and that even overrides any will you might have.

MY2CENTSWORTH | Mar 14, 2023 | 440 posts since 2016

Ally 6770, Thanks for taking the time to check into that and passing along your findings. Not sure how many might forget about insurance limits and the ins and outs of making sure you are doing some regular housekeeping to keep things as safe as possible.

Ally6770 | Mar 14, 2023 | 4,310 posts since 2010

You also could have an account with just yourself as owner with other beneficiaries and or no beneficiaries, a joint account, a trust account etc. With no beneficiaries there would be insurance on yourself. I am trying to arrange things for end of life. I want everything to be prepared and distributed with a death certificate to my children. No trust. No other beneficiaries. I have a pour over with an old trust if I forget something.
Before I retired POD was distributed at death with a death certificate. ITF was a revocable trust and names could be changed and the bank would not know it, or maybe a relative persuaded a person to change the trust beneficiaries and the bank would not get a new copy or the person forgot to bring in the changes or didn't want anyone to know. In the case someone persuaded the person to change the beneficiaries the banks want no part of a lawsuit distributing it to the wrong people. Also with ITF all bills have to be paid and verified as such before they are suppose to distribute the money. This was the law when I worked. Laws could have changed. So do not take this as truth. For me I want no fuss or problems and having beneficiaries is the way to go for me. It is easier to stay under the insurance limits and find another place to put the money if I have to. I will have to split a Roth in July. I keep a list in a large notebook with everything the kids have to do if they have to be POA, have all the papers signed by them, have copies of all sign cards of account openings with them on as beneficiaries etc. and also when I die what has to be done, and canceled etc with account numbers and phone numbers.I even has a free checking open with the 3 of us on it and I do one or two transactions in it each year so there are no fees. When I die they can put everything in there if they want or split it right away. My checking account is a reward checking and they will have money to pay house taxes and insurance, electric, heat etc until they decided what they want to do with the house. I did 2 estates in the early 80's while working 2 jobs. Not complicated but time consuming. Doesn't have to be now. Both of the kids work close to 80 hours a week though one gets 28 paid days off, plus personal days plus 4 5 weeks vacation and he is the numbers guy and will probably do the end of life stuff here or on the computer from his house. When he visits he works 10 hours and more downstairs with his 8 computers.
Also each state may have a there own form for POA for banking. If you chase rates, check with each credit union or bank make sure you have their papers signed and sent to them and copies of them in your file and in their notebook. But remember if you change names on the POA even those papers have to redone also. Many places will not allow closing or renewing an account or to even transfer money, make a mtg payment unless you have their POA. I have the electric and heating and credit card bill paid from my checking account each month so that will help when they are POA until I die. If I remember correctly there is a maximum of insurance on an account also.
But it looks like laws are going to be changed. So keep that in mind.

JeffinEasternFL | Mar 14, 2023 | 744 posts since 2020

Reading the FDIC site I AM CONFUSED:

does an account still have to be "POD'/ITF' titled? I.e. "John Q Public POD/ITF" and with two beneficiaries: "Alpha Beneficiary #1 99%", "Beta Beneficiary #2 1%"?
Does this get the owner John Q $500K FDIC/NCUA coverage??

OR JUST "John Q Public"
and with his two beneficiaries: "Alpha Beneficiary #1 99%" and "Beta Beneficiary #2 1%",
does THAT suffice for $500K coverage??
(No POD/ITF in the account registration title)

Ally6770 | Mar 15, 2023 | 4,310 posts since 2010

He told me once I named one beneficiary it made it into a Totten Trust. I have everything 50-50% so I don't how doing it differently goes with the insurance.
You will have to call or email them and have a written answer.

Ally6770 | Mar 15, 2023 | 4,310 posts since 2010

Also banks and credit unions are different. Banks have individual accounts under a name, while with credit unions you given a member number and usually all accounts have the same beneficiaries as the money in the membership account. It was quite difficult to change beneficiaries when I was POA or to take my name off my husbands accounts as he was getting worse and it was obvious he would pass before me. Eventually I was able to take my name off as beneficiary and joint so just the kids so they could inherit his money under his membership. IRA's are a little easier if you have contingent beneficiaries. The POA was done in the same state as the credit union that was giving me trouble so after contacting the NCUA it was done. In my state that POA has to specifically state that I can close, open any accounts make any payments etc or do anything that the owner can do. Navy credit union also has their own papers for a POA that the owner has to sign. You have to check each thing that the POA can do.

JeffinEasternFL | Mar 15, 2023 | 744 posts since 2020

As an FYI: All In CU in Alabama (the one with the current 5.05% APY Jumbo 60mo CD rate) will easily add that second or third beneficiary to your CD to get the (supposed?) increased NCUA coverage. No change of owner title to "POD" though. They will only run the beneficiary % to the last digit, not the 1/10th, i.e., 99%, 1% etc., (not 99.9% or .1%) but they do it all by secure message/email! The rep could NOT definitively tell me if my NCUA coverage by doing this was increased from $250K to $500K or not? A great service point though for All In CU. Response as usual to my secure message was in 2 hours with a phone call prior! Great CU!!

MY2CENTSWORTH | Mar 15, 2023 | 440 posts since 2016

Good info, Jeff. Thanks for passing it along,

Ally6770 | Mar 15, 2023 | 4,310 posts since 2010

I believe in 2024 trusts and POD accounts the maximum amount insured is limited. I posted it a while back as something to remember.I just looked it up. Rules change on April 1, 2024.
All the rules discussed in this section are current through March 31, 2024. The FDIC approved changes, on January 21, 2022, to the deposit insurance rules for revocable trust accounts (including formal trusts, POD/ITF), irrevocable trust accounts, and mortgage servicing accounts. For most trust depositors (those with less than $1,250,000), the FDIC expects the coverage levels to be unchanged.

JeffinEasternFL | Mar 15, 2023 | 744 posts since 2020

"limited" ? as limited to what??? Many banks and cu's will NOT add "POD" after an account owner's title/name. Does that matter?? Is NCUA rules the same as FDIC rules??

Ally6770 | Mar 15, 2023 | 4,310 posts since 2010

https://www.fdic.gov/resources/deposit-insurance/trust-accounts/

Includes phone numbers to call with questions.

Ltssharon | Mar 19, 2023 | 472 posts since 2020

Yep, I also saw that though it is not applicable to me.

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