August 12, 1997
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Dear [ ]:
The Office of Public and Congressional Affairs forwarded your
letter to the Office of General Counsel for response. We apologize
for the delay in our reply, however, we did not receive your letter
until May 28, 1997. You have asked for clarification as to how
much National Credit Union Share Insurance Fund (NCUSIF) insurance
coverage would be available for a combination of individual and
joint accounts established at two different federal credit unions
(FCU) by the same individual. Please note that accounts established
by one individual at two different FCUs are insured separately
provided the FCUs are truly two different FCUs, namely, that one
is not just a branch office of the same FCU. Therefore, we are
analyzing insurance coverage of accounts in only one FCU. The
same coverage would be available on like accounts in another FCU.
ANALYSIS
Individually owned accounts are insured up to $100,000 in the
aggregate. 12 C.F.R. �5.3. Accounts owned by the same
combination of joint owners are added together and insured up
to $100,000 as one joint account, not $100,000 per joint owner.
A person having an interest in multiple joint accounts, all with
different combinations of individuals, receives only $100,000
of insurance coverage for his or her total interest in such accounts.
12 C.F.R. �5.8(e). However, joint accounts are insured
separately from any individual accounts owned by the joint owners
provided the joint accounts are qualifying. 12 C.F.R. �5.8(b).
A joint account is qualifying if each joint owner has signed a
signature card and has equal rights of withdrawal. Id.
If one of the joint owners is a minor and state law restricts
a minor's withdrawal rights, the joint account still would be
considered qualifying. 12 C.F.R. �5, Appendix Part F.
Accounts not qualifying as joint accounts are insured as if individually
owned by the joint owners in accordance with their actual ownership
interests in the funds as determined under applicable state law.
12 C.F.R. �5.8(c) and Appendix Part F. Thus, where a
joint account is non-qualifying, the interest of each joint owner
would be added to his or her interest in any individually owned accounts
and insured up to $100,000 in the aggregate. 12 C.F.R. �5.8(c).
A member may establish a joint account with a nonmember if the
joint account is with right of survivorship. 12 C.F.R. �5.8(f).
A nonmember's interest in a joint account is insured in the same
manner as a member's interest. 12 C.F.R. �5.8(f). For
insurance purposes, joint owners with right of survivorship are
deemed to have equal interests in the account. 12 C.F.R. �5,
Appendix Part F.
You present a hypothetical scenario in which John Doe has established
the following set of accounts in an FCU.
Account 1 - in the name of John Doe
Account 2 - in the name of John Doe and/or Jane Doe
Account 3 - in the name of John Doe and/or Ann Doe
Account 4 - in the name of John Doe and/or Peter Doe
The accounts were established when John Doe's children, Jane,
Ann, and Peter, were minors; however, the children are no longer
minors. At present, only John Doe is a member of the FCUs, and
neither Jane, Ann, nor Peter has signed an application or signature
card at either FCU. They are not aware that these joint accounts
exist. You ask how much insurance coverage is available.
Under your hypothetical scenario, Accounts 1, 2, 3, and 4 would
receive only $100,000 of NCUSIF insurance coverage. The reason
is that Accounts 2, 3, and 4 would not qualify as joint accounts
and would be insured as if individually owned by the joint owners
in accordance with their actual ownership interests in the funds.
Jane, Ann, and Peter have not signed a signature card and do not
have the same rights of withdrawal as John Doe in Accounts 2,
3, and 4. Since it seems John Doe contributed all the funds in
each Account, he would be recognized as the actual owner of the
funds in Accounts 2, 3, and 4. Thus, John Doe's interest in Accounts
2, 3, and 4 would be added to his interest in Account 1 and insured
for only $100,000.
If Accounts 2, 3, and 4 were qualifying joint accounts, Account
1 would be insured for up to $100,000, as John Doe's individual
account, separately from Accounts 2, 3, and 4. As joint owners,
John, Jane, Ann, and Peter would be presumed to have equal ownership
interests in their respective joint accounts. Under that presumption,
Jane, Ann, and Peter could each have up to $50,000 of account
insurance coverage for their respective interests in Accounts 2, 3,
and 4. John Doe's interest
in Accounts 2, 3, and 4 would be added together and insured up
to an additional $100,000.
For further guidance, enclosed is a copy of the NCUA pamphlet,
"Your Insured Funds," and a copy of NCUA's Regulation
Part 745 with the Appendix. If you need further assistance, please
contact Nicole Sippial Williams, Staff Attorney, at 703-518-6540.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/NSW:bhs
SSIC 8000
97-0540
Enclosures
cc: Office of Public and Congressional Affairs (w/o enclosures)