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Compliance Know your share insurance rules
WASHINGTON (8/18/08)—With the country’s financial markets in turmoil, more and more Americans are asking questions about federal share insurance coverage to determine if their money is safe. The Credit Union National Association’s (CUNA’s) August Compliance Challenge poses several questions that deepen credit unions’ understanding of how insurance works. For instance, the Challenge notes in one question that there is no “qualified beneficiary” distinction for irrevocable trust account beneficiaries. Such beneficiaries do not have to be a spouse, child, grandchild, parent or sibling. Another question clarifies that the National Credit Union Administration (NCUA) has adopted the definition of “marriage” and “spouse” found in the Defense of Marriage Act (HR 3396). Under the Act, “marriage” is defined as a legal union between one man and one woman and “spouse” refers only to individuals of the opposite gender. Therefore, the Challenge notes, same-sex partners united in states permitting same-gender unions may not be named as a ”qualified account beneficiary” who would thereby be entitled to separate share insurance coverage up to $100,000. And in a third related question, the CUNA compliance experts ask (and answer): How should account cards be titled to ensure proper share insurance coverage for “Payable on Death” (POD) and Living Trust Accounts? The answer: In the case of POD accounts, if the POD line or lines are filled in on the account card, the account is insured separately as a “revocable trust” with each qualified beneficiary, as defined above, being entitled to share insurance coverage up to $100,000. The account doesn’t have to be specifically titled as a “POD” and no trustees would be listed. In the case of a living trust account, the NCUA’s ‘How Your Accounts Are Insured” booklet states: “Credit unions can establish a common revocable trust payable-on-death (POD) account without additional documentation; however, some trusts require additional, valid documentation to qualify for coverage.” For more information on this issue, the above questions, and many other challenges in the compliance world, use the resource link below to visit CUNA’s Compliance Challenge.
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