Federal Register / Vol. 88, No. 205 / Wednesday, October 25, 2023 / Proposed Rules 73249 

cost value of the project under 

construction or rehabilitation, or 

applicable State required coverage 

limits, if more stringent. 

* * * * * 

(v) Business income loss. Business 

income or rent loss coverage provides 

coverage for the loss of rental income 

incurred due to a property loss during 

a 12-month period. 

(2) * * * 

(i) Windstorm Coverage if specifically 

excluded from the All-Risk policy. 

* * * * * 

(3) For property insurance, the 

minimum coverage amount must equal 

the ‘‘Total Estimated Reproduction Cost 

of New Improvements,’’ as reflected in 

the housing project’s most recent 

appraisal. At a minimum, property 

insurance coverage must not be less 

than 80 percent of the insurable 

replacement cost value, unless such 

coverage is financially unfeasible for the 

housing project. 

* * * * * 

(ii) When required by paragraph (f)(1) 

of this section, the coverage amount for 

flood insurance must not be less than 80 

percent of the insurable replacement 

value, or the maximum amount of 

insurance available with respect to the 

project under the National Flood 

Insurance Act, whichever is less. The 

policy shall show the Owner as insured 

and shall show loss, if any, payable to 

the United States of America acting 

through the RHS Service or its successor 

agency. 

(4) Except for flood insurance, 

property insurance is not required if the 

housing project is in a condition which 

the Agency determines makes insurance 

coverage not economical. 

* * * * * 

(7) When the Agency is in the first 

lien position and an insurance 

settlement represents a satisfactory 

adjustment of a loss, the insurance 

settlement will be deposited in the 

housing project’s general operating 

account unless the settlement exceeds 

$5,000. If the settlement exceeds $5,000, 

the funds will be placed in the reserve 

account or other supervised account for 

the housing project. 

* * * * * 

(9) * * * 

(i) Hazard/property insurance. * * * 

(A) For a project with less than or 

equal to $1,000,000 of coverage, no 

deductible greater than $10,000 per 

occurrence. 

(B) For a project with more than 

$1,000,000 but less than or equal to 

$2,000,000 of coverage, no deductible 

greater than $25,000 per occurrence. 

(C) For a project with more than 

$2,000,000 of coverage, no deductible 

greater than $50,000 per occurrence. 

* * * * * 

(iii) Windstorm coverage. When 

windstorm coverage is excluded from 

the ‘‘All Risk’’ policy, the deductible is 

as identified in (f)(9)(i) of this section. 

(iv) Earthquake coverage. If the 

borrower obtains earthquake coverage, 

the Agency is to be named as a loss 

payee. The deductible should be no 

more than 20 percent of the coverage 

amount. 

* * * * * 

(11) Each policy shall meet the 

following requirements: 

(i) Policy may not be cancelled or 

modified without at least thirty (30) 

days prior written notice to the Agency 

(the clause shall not state that the 

insurer will ‘‘endeavor’’ to send such 

notice or that no liability attaches to the 

insurer for failure to send such notice.) 

(ii) Policy shall provide that any loss 

otherwise payable thereunder shall be 

payable notwithstanding any act or 

negligence of Borrower which might, 

absent such agreement, result in a 

forfeiture of all or part of such insurance 

payment. 

(iii) Such insurance policies shall 

name the Owner as the Insured and 

shall carry a standard form of NonContribution Mortgage Clause showing 

loss or damage, if any, payable to the 

Owner and the ‘‘United States of 

America acting through the Rural 

Housing Service or its successor 

agency,’’ as its interest may appear. 

* * * * * 

(h) * * * 

(2) * * * 

(ii) Fidelity coverage amount and 

deductible as follows: 

(A) Coverage amount. An amount at 

least equal to 25 percent of the 

operational cash sources per the 

project’s proposed annual budget or 

$50,000 whichever is greater, unless 

greater amounts are required by the 

Owner. Where the operational cash 

sources for a project are substantially 

below the minimum $50,000 bonding 

requirement for operation, with Agency 

approval, the bond may be reduced to 

an amount sufficient to cover at least 25 

percent of the operational cash sources. 

(B) Deductible. No greater than 

$15,000 per occurrence. 

* * * * * 

(i) Workers’ compensation insurance. 

This insurance coverage, which may 

also be known as employer’s liability 

coverage, provides benefits to 

employees who suffer work-related 

injuries or illnesses. Workers’ 

compensation insurance is required for 

permanent and part-time staff assigned 

directly to the project. 

(j) Taxes. The borrower is responsible 

for paying all taxes and assessments on 

a housing project before they become 

delinquent. 

* * * * * 

Yvonne Hsu, 

Acting Administrator, Rural Housing Service. 

[FR Doc. 2023–23344 Filed 10–24–23; 8:45 am] 

BILLING CODE 3410–XV–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 745 

[NCUA–2023–0082] 

RIN 3133–AF53 

Simplification of Share Insurance 

Rules 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Proposed rule. 

SUMMARY: The NCUA Board (Board) is 

seeking comment on proposed 

amendments to its regulations governing 

share insurance coverage. The proposed 

rule would address the following items: 

simplify the share insurance regulations 

by establishing a ‘‘trust accounts’’ 

category that would provide for 

coverage of funds of both revocable 

trusts and irrevocable trusts deposited at 

federally insured credit unions (FICUs); 

provide consistent share insurance 

treatment for all mortgage servicing 

account balances held to satisfy 

principal and interest obligations to a 

lender; and provide more flexibility for 

the NCUA to consider various records in 

determining share insurance coverage in 

liquidations. 

DATES: Comments must be received on 

or before December 26, 2023. 

ADDRESSES: You may submit written 

comments by any of the following 

methods (Please send comments by one 

method only): 

• Federal eRulemaking Portal: 

https://www.regulations.gov. The docket 

number for this proposed rule is NCUA– 

2023–0082. Follow the instructions for 

submitting comments. 

• Mail: Address to Melane ConyersAusbrooks, Secretary of the Board, 

National Credit Union Administration, 

1775 Duke Street, Alexandria, Virginia 

22314. 

• Hand Delivery/Courier: Same as 

mail address. 

Public inspection: All public 

comments are available on the Federal 

eRulemaking Portal at https:// 


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73250 Federal Register / Vol. 88, No. 205 / Wednesday, October 25, 2023 / Proposed Rules 

1 12 U.S.C. 1787(k)(1)(A), (k)(6). 

2 12 U.S.C. 1787(k)(1)(B). 

3 12 U.S.C. 1787(k)(1)(C). 

4 12 CFR part 745. 

5See 12 U.S.C. 1787(k)(2). 

6See 12 U.S.C. 1787(k)(3). 

7 12 CFR 745.8. 

8 12 CFR 745.6. 

9 12 U.S.C. 1752(5). 

10 12 U.S.C. 1751 et seq. 

11 12 U.S.C. 1766(a). 

12 12 U.S.C. 1787. 

13 12 U.S.C. 1789(a)(11). 

www.regulations.gov as submitted, 

except when impossible for technical 

reasons. Public comments will not be 

edited to remove any identifying or 

contact information. If you are unable to 

access public comments on the internet, 

you may contact the NCUA for 

alternative access by calling (703) 518– 

6540 or emailing OGCMail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Thomas Zells, Senior Staff Attorney, 

Office of General Counsel, at (703) 518– 

6540 or by mail at National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. General Background and Legal Authority 

A. General Background 

B. Legal Authority 

II. Simplification of Share Insurance Trust 

Rules 

A. Policy Objectives 

B. Background and Need for Rulemaking 

1. Evolution of Insurance Coverage of 

Funds Held in Trust Accounts 

2. Current Rules for Coverage of Funds 

Held in Trust Accounts 

3. Need for Further Rulemaking 

C. Description of Proposed Rule 

D. Examples Demonstrating Coverage 

Under Current and Proposed Rules 

E. Request for Comment 

III. Amendments to Mortgage Servicing 

Account Rule 

A. Policy Objectives 

B. Background and Need for Rulemaking 

C. Description of Proposed Rule 

D. Request for Comment 

IV. Recordkeeping Requirements 

A. Policy Objectives 

B. Background and Need for Rulemaking 

C. Description of Proposed Rule 

D. Request for Comment 

V. Regulatory Procedures 

A. Regulatory Flexibility Act 

B. Paperwork Reduction Act 

C. Executive Order 13132 on Federalism 

D. Assessment of Federal Regulations and 

Policies on Families 

I. General Background and Legal 

Authority 

A. General Background 

The NCUA is an independent Federal 

agency that insures funds maintained in 

accounts of members or those otherwise 

eligible to maintain insured accounts 

(member accounts) at FICUs, protects 

the members who own credit unions, 

and charters and regulates Federal 

credit unions (FCUs). The NCUA 

protects the safety and soundness of the 

credit union system by identifying, 

monitoring, and reducing risks to the 

National Credit Union Share Insurance 

Fund (Share Insurance Fund). Backed 

by the full faith and credit of the United 

States, the Share Insurance Fund 

provides Federal share insurance to 

millions of account holders in all FCUs 

and the majority of state-chartered 

credit unions. 

Under the Federal Credit Union Act 

(FCU Act), the NCUA is responsible for 

paying share insurance to any member, 

or to any person with funds lawfully 

held in a member account, in the event 

of a FICU’s failure up to the standard 

maximum share insurance amount 

(SMSIA), which is currently set at 

$250,000.1 The FCU Act states the 

determination of the net amount of 

share insurance paid ‘‘shall be in 

accordance with such regulations as the 

Board may prescribe’’ and requires that, 

‘‘in determining the amount payable to 

any member, there shall be added 

together all accounts in the credit union 

maintained by that member for that 

member’s own benefit, either in the 

member’s own name or in the names of 

others.’’ 2 However, the FCU Act also 

specifically authorizes the Board to 

‘‘define, with such classifications and 

exceptions as it may prescribe, the 

extent of the share insurance coverage 

provided for member accounts, 

including member accounts in the name 

of a minor, in trust, or in joint 

tenancy.’’ 3

The NCUA has implemented these 

requirements by issuing regulations 

recognizing particular categories of 

accounts, such as single ownership 

accounts, joint ownership accounts, 

revocable trust accounts, and 

irrevocable trust accounts.4 If an 

account meets the requirements for a 

particular category, the account is 

insured up to the $250,000 limit 

separately from shares held by the 

member in a different account category 

at the same FICU. For example, 

provided all requirements are met, 

shares in the single ownership category 

will be separately insured from shares 

in the joint ownership category held by 

the same member at the same FICU. 

The NCUA’s share insurance 

categories have been defined through 

both statute and regulation. Certain 

categories, such as the accounts held by 

government depositors 5 and certain 

retirement accounts, including 

individual retirement accounts, have 

been expressly defined by Congress.6

Other categories, such as joint 

accounts 7 and corporate accounts,8

have been based on statutory 

interpretation and recognized through 

regulations issued in 12 CFR part 745 

pursuant to the NCUA’s rulemaking 

authority. In addition to defining the 

insurance categories, the share 

insurance regulations in part 745 

provide the criteria used to determine 

insurance coverage for shares in each 

category. 

It is also worth noting that the FCU 

Act provides a definition of the term 

‘‘member account.’’ The NCUA insures 

‘‘member accounts’’ at all FICUs.9

Importantly, the term ‘‘member 

account’’ is not limited to those persons 

enumerated in the credit union’s field of 

membership who have become 

members. It also permits certain 

nonmembers, such as other nonmember 

credit unions, nonmember public units 

and political subdivisions, and, in the 

case of low-income designated credit 

unions, deposits of nonmembers 

generally. In other words, the NCUA 

provides share insurance coverage to 

members and those otherwise eligible to 

maintain insured accounts at FICUs. 

As discussed in more detail below, 

the proposed amendments reflect the 

Board’s aim to: (1) provide FICUs, FICU 

employees, and those with member 

accounts at FICUs, with a rule that is 

easier to understand; (2) provide parity 

with changes adopted by the FDIC in 

January 2022; and (3) facilitate the 

prompt payment of share insurance in 

accordance with the FCU Act, among 

other objectives. 

B. Legal Authority 

The Board has issued this proposed 

rule pursuant to its authority under the 

FCU Act. Under the FCU Act, the NCUA 

is the chartering and supervisory 

authority for FCUs and the Federal 

supervisory authority for FICUs.10 The 

FCU Act grants the NCUA a broad 

mandate to issue regulations governing 

both FCUs and FICUs. Section 120 of 

the FCU Act is a general grant of 

regulatory authority and authorizes the 

Board to prescribe rules and regulations 

for the administration of the FCU Act.11

Section 207 of the FCU Act is a specific 

grant of authority over share insurance 

coverage, conservatorships, and 

liquidations.12 Section 209 of the FCU 

Act is a plenary grant of regulatory 

authority to the NCUA to issue rules 

and regulations necessary or appropriate 

to carry out its role as share insurer for 

all FICUs.13 Accordingly, the FCU Act 

grants the Board broad rulemaking 


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14Trusts include informal revocable trusts 

(commonly referred to as payable-on-death 

accounts, in-trust-for accounts, or Totten trusts), 

formal revocable trusts, and irrevocable trusts. 

15 87 FR 4455 (Jan. 28, 2022). 

16 73 FR 60616 (Oct. 14, 2008). 

17The NCUA’s Office of Credit Union Resources 

and Expansion, which fields most share insurance 

inquiries, only began tracking calls received on 

October 31, 2019. The high volume of trust-related 

inquires predates this tracking. 

18 In 2008, the NCUA adopted an insurance 

calculation for revocable trusts that have five or 

fewer beneficiaries. Under this rule, 12 CFR 

745.4(a), each trust grantor is insured up to 

$250,000 per beneficiary. 

19 87 FR 4455 (Jan. 28, 2022). 

20 86 FR 11098 (Feb. 24, 2021). 

21 12 U.S.C. 1787(d)(1). 

22 36 FR 2477 (Feb. 5, 1971). 

23 69 FR 8798 (Feb. 26, 2004). 

authority to ensure that the credit union 

industry and the Share Insurance Fund 

remain safe and sound. 

II. Simplification of Share Insurance 

Trust Rules 

A. Policy Objectives 

The Board is seeking comment on 

proposed amendments to its regulations 

governing share insurance coverage for 

funds held in member accounts at 

FICUs in connection with trusts.14 The 

proposed amendments are intended to: 

(1) provide FICUs, FICU employees, and 

those with member accounts at FICUs 

with a rule for trust account coverage 

that is easier to understand; (2) provide 

parity with changes adopted by the 

FDIC in January 2022; 15 and (3) 

facilitate the prompt payment of share 

insurance in accordance with the FCU 

Act, among other objectives. 

Accomplishing these objectives also 

would further the NCUA’s mission in 

other respects, as discussed in greater 

detail below. 

Clarifying Insurance Coverage for Trust 

Accounts 

The share insurance trust rules have 

evolved over time and can be difficult 

to apply in some circumstances. The 

proposed amendments would clarify for 

FICUs, their employees, their 

accountholders, and other interested 

parties the insurance rules and limits for 

trust accounts. The proposal both 

reduces the number of rules governing 

coverage for trust accounts and 

establishes a straightforward calculation 

to determine coverage. The proposed 

amendments are intended to alleviate 

some of the confusion that FICUs, their 

employees, and their accountholders 

may experience with respect to 

insurance coverage and limits. 

Under the current regulations, there 

are distinct and separate sets of rules 

applicable to shares of revocable trusts 

as opposed to irrevocable trusts. Each 

set of rules has its own criteria for 

coverage and methods by which 

coverage is calculated. Despite the 

NCUA’s efforts to simplify the revocable 

trust rules in 2008, the consistently high 

volume of complex inquiries about trust 

accounts over an extended period 

suggests continued confusion about 

insurance limits.16 NCUA share 

insurance specialists have answered 

over 13,000 calls with questions since 

the fourth quarter of 2019 alone.17 It is 

estimated that over 50 percent of these 

inquiries, which do not include those 

received through email or submitted 

through mycreditunion.gov, pertain to 

share insurance coverage for trust 

accounts (revocable or irrevocable). To 

help clarify insurance limits, the 

proposed amendments would further 

simplify insurance coverage of trust 

accounts (revocable and irrevocable) by 

harmonizing the coverage criteria for 

revocable and irrevocable trust accounts 

and by establishing a simplified formula 

for calculating coverage that would 

apply to these funds deposited at FICUs. 

The NCUA proposes using the 

calculation the NCUA first adopted in 

2008 for revocable trust accounts with 

five or fewer beneficiaries. This formula 

is straightforward and is already 

generally familiar to FICUs and their 

members.18 The current formulas for 

revocable trust accounts with more than 

five beneficiaries and irrevocable trust 

accounts would be eliminated. 

Parity 

Adoption of the proposed changes 

would also align with changes the FDIC 

adopted in January 2022, which are set 

to take effect on April 1, 2024.19 As it 

stressed in its 2021 final rule addressing 

the share insurance coverage of joint 

ownership accounts, the Board believes 

it is important to maintain parity 

between the nation’s two Federal 

deposit/share insurance programs, 

which are backed by the full faith and 

credit of the United States.20 The Board 

believes it is important that members of 

the public who use trust accounts 

receive the same protection whether the 

accounts are maintained at FICUs or 

other federally insured institutions. 

Prompt Payment of Share Insurance 

The FCU Act requires the NCUA to 

pay accountholders ‘‘as soon as 

possible’’ after a FICU liquidation.21

However, the insurance determination 

and subsequent payment for many trust 

accounts can be delayed when NCUA 

staff must review complex trust 

agreements and apply various rules for 

determining share insurance coverage. 

The proposed amendments are intended 

to facilitate more timely share insurance 

determinations for trust accounts by 

reducing the time needed to review trust 

agreements and determine coverage. 

These amendments should promote the 

NCUA’s ability to pay insurance 

proceeds to accountholders more 

quickly following the liquidation of a 

FICU, enabling accountholders to meet 

their financial needs and obligations. 

Facilitating Liquidations 

The proposed changes will also 

facilitate the liquidation of failed FICUs. 

The NCUA is routinely required to make 

share insurance determinations in 

connection with FICU liquidations. In 

many of these instances, however, share 

insurance coverage for certain trust 

accounts is based upon information that 

is not maintained in the FICU’s account 

records. As a result, NCUA staff work 

with accountholders to obtain trust 

documentation following a FICU’s 

liquidation to complete share insurance 

determinations. The difficulties 

associated with completing such a 

determination are exacerbated by the 

substantial growth in the use of formal 

trusts in recent decades. The proposed 

amendments could reduce the time 

spent reviewing such information, 

thereby reducing potential delays in the 

completion of share insurance 

determinations and payments. 

B. Background and Need for 

Rulemaking 

1. Evolution of Insurance Coverage of 

Funds Held in Trust Accounts 

The NCUA first adopted regulations 

governing share insurance coverage in 

1971.22 Over the years, share insurance 

coverage has evolved to reflect both the 

NCUA’s experience and changes in the 

credit union industry. While the 

regulations addressing irrevocable trusts 

have undergone minimal change, the 

regulations addressing revocable trusts 

have seen numerous changes, largely 

aimed at providing increased flexibility 

and simplifying coverage. Of note, in 

2004 the NCUA amended the revocable 

trust rules, pointing to continued 

confusion about the coverage for 

revocable trust deposits and the need for 

parity with then recent FDIC 

amendments.23 Specifically, the NCUA 

eliminated the defeating contingency 

provisions of the rules, with the result 

that coverage would be based on the 

interests of qualifying beneficiaries, 

irrespective of any defeating 


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73252 Federal Register / Vol. 88, No. 205 / Wednesday, October 25, 2023 / Proposed Rules 

24Prior to the changes adopted in 2004, if the 

interest of a qualifying beneficiary in an account 

established under the terms of a living trust 

agreement was contingent upon fulfillment of a 

specified condition, referred to as a defeating 

contingency, separate insurance was not available 

for that beneficial interest. Instead, the beneficial 

interest would be added to any individual 

account(s) of the grantor and insured up to the 

SMSIA, then $100,000. An example of a defeating 

contingency is where an account owner names his 

son as a beneficiary but specifies in the living trust 

document that his son’s ability to receive any share 

of the trust funds is dependent upon him 

successfully completing college. 

25 12 CFR 745.2(d). 

26 69 FR 8798, 8799 (Feb. 26, 2004). 

27 73 FR 60616 (Oct. 14, 2008). 

28See 12 CFR part 701, app. A. Art. III, sec. 6 

(‘‘Shares issued in a revocable trust—the settlor 

must be a member of this credit union in his or her 

own right.’’). 

29See 12 CFR part 701, app. A. Art. III, sec. 6 

(‘‘Shares issued in an irrevocable trust—either the 

settlor or the beneficiary must be a member of this 

credit union.’’). 

30 12 CFR 745.4(a). 

31 12 CFR 745.4(c). 

32 12 CFR 745.4(d). 

33 12 CFR 745.4(b). 

34 Id. 

35For a FICU to open a revocable trust account, 

all grantors/settlors of the trust must be members 

of the FICU or otherwise eligible to maintain an 

insured account. See 12 CFR part 701, app. A. Art. 

contingencies in the trust agreement.24

This more closely aligned coverage for 

formal revocable trust accounts with 

payable-on-death accounts. Importantly, 

and of relevance to this proposal, 

defeating contingency provisions were 

not eliminated for irrevocable trusts and 

remain relevant for calculating share 

insurance coverage under the 

irrevocable trust provisions.25 At the 

same time, the NCUA also eliminated 

the requirement to name the 

beneficiaries of a formal revocable trust 

in the FICU’s account records.26 The 

NCUA recognized that a grantor may 

elect to change the beneficiaries or their 

interests at any time before his or her 

death and that requiring a FICU to 

maintain a current record of this 

information is impractical and 

unnecessarily burdensome. 

More recently, the NCUA’s experience 

and adoption of similar revisions by the 

FDIC suggested that further changes to 

the trust rules were necessary. 

Specifically, in 2008, the NCUA 

simplified the rules in several 

respects.27 First, it eliminated the 

kinship requirement for revocable trust 

beneficiaries, instead allowing any 

natural person, charitable organization, 

or non-profit to qualify for perbeneficiary coverage. Second, a 

simplified calculation was established if 

a revocable trust named five or fewer 

beneficiaries; coverage would be 

determined without regard to the 

allocation of interests among the 

beneficiaries. This eliminated the need 

to discern and consider beneficial 

interests in many cases. 

A different insurance calculation 

applied to revocable trusts with more 

than five beneficiaries. At that time, the 

SMSIA was $100,000, and thus, if more 

than five beneficiaries were named in a 

revocable trust, coverage would be the 

greater of (1) $500,000; or (2) the 

aggregate amount of all beneficiaries’ 

interests in the trust(s), limited to 

$100,000 per beneficiary. When the 

SMSIA was increased to $250,000, a 

similar adjustment was made from 

$100,000 to $250,000 for the calculation 

of per beneficiary coverage. 

2. Current Rules for Coverage of Funds 

Held in Trust Accounts 

The NCUA recognizes two different 

insurance categories for funds held in 

connection with trusts at FICUs: (1) 

revocable trusts and (2) irrevocable 

trusts. The current rules for determining 

insurance coverage for shares in each of 

these categories are described below. 

Additionally, share insurance coverage 

is always limited to FICU members and 

those otherwise eligible to maintain 

insured accounts at the FICU. The 

NCUA’s longstanding position has been 

that, for revocable trust accounts, all 

grantors (sometimes described as 

settlors) of the trust must be members of 

the FICU or otherwise eligible to 

maintain an insured account.28 For 

irrevocable trust accounts, the NCUA 

has maintained the position that either 

all grantors/settlors or all beneficiaries 

of the trust must be members of the 

FICU or otherwise eligible to maintain 

an insured account.29 As described in 

greater detail in section II.E., the NCUA 

appreciates commenter feedback as to 

whether these positions should be 

revisited. 

Revocable Trust Accounts 

The revocable trust category applies 

to funds for which the member has 

evidenced an intention that the funds 

shall belong to one or more beneficiaries 

upon his/her/their death. This category 

includes funds held in connection with 

formal revocable trusts—that is, 

revocable trusts established through a 

written trust agreement. It also includes 

funds that are not subject to a formal 

trust agreement, where the FICU makes 

payment to the beneficiaries identified 

in the FICU’s records upon the 

member’s death, based on account 

titling and applicable state law. The 

NCUA refers to these types of accounts, 

including Totten trust accounts, 

payable-on-death accounts, and similar 

accounts, as ‘‘informal revocable trusts.’’ 

Funds associated with formal and 

informal revocable trusts are aggregated 

for the purposes of the share insurance 

rules; thus, funds that will pass from the 

same grantor to beneficiaries are 

aggregated and insured up to the 

SMSIA, currently $250,000, per 

beneficiary, regardless of whether the 

transfer would be accomplished through 

a written revocable trust or an informal 

revocable trust.30

Under the current revocable trust 

rules, beneficiaries with insurable 

interests are limited to natural persons, 

charitable organizations, and non-profit 

entities recognized as such under the 

Internal Revenue Code of 1986.31 If a 

named beneficiary does not satisfy this 

requirement, funds held in trust for that 

beneficiary are treated as single 

ownership funds of the grantor and 

aggregated with any other single 

ownership accounts the grantor 

maintains at the same FICU.32

Certain requirements also must be 

satisfied for an account to be insured in 

the revocable trust category. The 

required intention that the funds shall 

belong to the beneficiaries upon the 

grantor’s death must be manifested in 

the ‘‘title’’ of the account or elsewhere 

in the account records of the credit 

union using commonly accepted terms 

such as ‘‘in trust for,’’ ‘‘as trustee for,’’ 

‘‘payable-on-death to,’’ or any acronym 

for these terms.33 For the purposes of 

this requirement, a FICU’s electronic 

account records are included. For 

example, a FICU’s electronic account 

records could identify the account as a 

revocable trust account through coding 

or a similar mechanism. In addition, the 

beneficiaries of informal trusts (i.e., 

payable-on-death accounts) must be 

named in the FICU’s account records.34

The requirement to name beneficiaries 

in the FICU’s account records does not 

apply to formal revocable trusts; the 

NCUA generally obtains information on 

beneficiaries of such trusts from 

accountholders following a FICU’s 

liquidation. Therefore, if a member’s 

account funds exceed $250,000 at a 

liquidated FICU, this will result in a 

hold being placed on the member’s 

funds in excess of the SMSIA until the 

NCUA can review the ownership 

documents and trust agreement to verify 

the beneficiary rules are satisfied, 

thereby delaying insurance 

determinations and full insurance 

payments to some insured 

accountholders. 

The calculation of share insurance 

coverage for revocable trust accounts 

depends upon the number of unique 

beneficiaries named by a member 

accountholder.35 If five or fewer 


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Federal Register / Vol. 88, No. 205 / Wednesday, October 25, 2023 / Proposed Rules 73253 

III, sec. 6 (‘‘Shares issued in a revocable trust—the 

settlor must be a member of this credit union in his 

or her own right.’’). 36 12 CFR 745.4(a). 37 12 CFR 745.4(e). 38 12 CFR 745.4(g). For example, if a revocable 

trust provides a life estate for the member 

accountholder’s spouse and remainder interests for 

six other beneficiaries, the spouse’s life estate 

interest would be valued at the lesser of $250,000 

or the amount held in the trust for the purposes of 

the share insurance calculation. 39 12 CFR 745.4(f)(1). 40 12 CFR 745.4(f)(2). 41 12 CFR 745.4(h). 

42The revocable trust rules tend to provide 

greater coverage than the irrevocable trust rules 

because contingencies are not considered for 

revocable trusts. In addition, where five or fewer 

beneficiaries are named by a revocable trust, 

specific allocations to beneficiaries also are not 

considered. 

43 12 CFR 745.2(d) and 745.9–1. 

44 12 CFR 745.2(d)(1). For example, a life estate 

interest is generally non-contingent, as it may be 

valued using the life expectancy tables. However, 

where a trustee has discretion to divert funds from 

one beneficiary to another to provide for the second 

beneficiary’s medical needs, the first beneficiary’s 

interest is contingent upon the trustee’s discretion. 

45 12 CFR 745.9–1(b). 

46 12 CFR 745.2(d)(2). 

47See 12 CFR 745.2(d)(4) (The term ‘‘trust 

interest’’ does not include any interest retained by 

the settlor.). 

beneficiaries have been named, the 

member accountholder is insured in an 

amount up to the total number of named 

beneficiaries multiplied by the SMSIA, 

and the specific allocation of interests 

among the beneficiaries is not 

considered.36 If more than five 

beneficiaries have been named, the 

member accountholder is insured up to 

the greater of: (1) five times the SMSIA; 

or (2) the total of the interests of each 

beneficiary, with each such interest 

limited to the SMSIA.37 For the 

purposes of this calculation, a life estate 

interest is valued at the SMSIA.38

Where a revocable trust account is 

jointly owned, the interests of each 

account owner are separately insured up 

to the SMSIA per beneficiary.39

However, if the co-owners are the only 

beneficiaries of the trust, the account is 

instead insured under the NCUA’s joint 

account rule.40

The current revocable trust rule also 

contains a provision that was intended 

to reduce confusion and the potential 

for a decrease in share insurance 

coverage in the case of the death of a 

grantor. Specifically, if a revocable trust 

becomes irrevocable due to the death of 

the grantor, the trust account may 

continue to be insured under the 

revocable trust rules.41 Absent this 

provision, the irrevocable trust rules 

would apply following the grantor’s 

death, as the revocable trust becomes 

irrevocable at that time, which could 

result in a reduction in coverage.42

Irrevocable Trust Accounts 

Accounts maintaining funds held by 

an irrevocable trust that has been 

established either by written agreement 

or by statute are insured in the 

irrevocable trust share insurance 

category. Calculating coverage in this 

category requires a determination of 

whether beneficiaries’ interests in the 

trust are contingent or non-contingent.43

Non-contingent interests are interests 

that may be determined without 

evaluation of any contingencies, except 

for those covered by the present worth 

and life expectancy tables and the rules 

for their use set forth in the Internal 

Revenue Service (IRS) Federal Estate 

Tax Regulations.44 Funds held for noncontingent trust interests are insured up 

to the SMSIA for each such 

beneficiary.45 Funds held for contingent 

trust interests are aggregated and 

insured up to the SMSIA in total.46

The irrevocable trust rules do not 

apply to funds held for a grantor’s 

retained interest in an irrevocable 

trust.47 Such funds are aggregated with 

the grantor’s other single ownership 

funds for the purposes of applying the 

share insurance limit. 

3. Need for Further Rulemaking 

As noted, the rules governing share 

insurance coverage for trust accounts 

have been simplified on several 

occasions. However, these rules are still 

frequently misunderstood and can 

present some implementation 

challenges. The trust rules can require 

overly detailed, time-consuming, and 

resource-intensive reviews of trust 

documentation to obtain the 

information necessary to calculate share 

insurance coverage. This information is 

often not found in a FICU’s records and 

must be obtained from members after a 

FICU’s liquidation. Revision of the share 

insurance coverage rules for trust 

accounts along the lines proposed 

would reduce the amount of 

information that must be provided for 

trust accounts, as well as the complexity 

of the NCUA’s review. This revision 

should enable the NCUA to complete 

share insurance determinations more 

rapidly if a FICU with a large number 

of trust accounts is liquidated. Delays in 

the payment of share insurance can be 

consequential for accountholders and 

the proposal would help to mitigate 

those delays. 

Several factors contribute to the 

challenges of making insurance 

determinations for trust accounts. First, 

there are two different sets of rules 

governing share insurance coverage for 

trust accounts. Understanding the 

coverage for a particular account 

requires a threshold inquiry to 

determine which set of rules to apply— 

the revocable trust rules or the 

irrevocable trust rules. This requires 

review of the trust agreement to 

determine the type of trust (revocable or 

irrevocable), and the inquiry may be 

complicated by innovations in state 

trust law that are intended to increase 

the flexibility and utility of trusts. In 

some cases, this threshold inquiry is 

also complicated by the provision of the 

revocable trust rules that allows for 

continued coverage under the revocable 

trust rules where a trust becomes 

irrevocable upon the grantor’s death. 

The result of an irrevocable trust deposit 

being insured under the revocable trust 

rules has proven confusing for both 

accountholders and FICUs. 

Second, even after determining which 

set of rules applies to a particular 

account, it may be challenging to apply 

the rules. For example, the revocable 

trust rules include unique titling 

requirements and beneficiary 

requirements. These rules also provide 

for two separate calculations to 

determine insurance coverage, 

depending in part upon whether there 

are five or fewer trust beneficiaries or at 

least six beneficiaries. In addition, for 

revocable trusts that provide benefits to 

multiple generations of potential 

beneficiaries, the NCUA needs to 

evaluate the trust agreement to 

determine whether a beneficiary is a 

primary beneficiary (immediately 

entitled to funds when a grantor dies), 

contingent beneficiary, or remainder 

beneficiary. Only eligible primary 

beneficiaries and remainder 

beneficiaries are considered in 

calculating NCUA share insurance 

coverage. The irrevocable trust rules 

may require detailed review of trust 

agreements to determine whether 

beneficiaries’ interests are contingent 

and may also require actuarial or 

present value calculations. These types 

of requirements complicate the 

determination of insurance coverage for 

trust deposits, have proven confusing 

for accountholders, and extend the time 

needed to complete a share insurance 

determination and insurance payment. 

Third, the complexity and variety of 

account holders’ trust arrangements 

adds to the difficulty of determining 

share insurance coverage. For example, 

trust interests are sometimes defined 

through numerous conditions and 

formulas, and a careful analysis of these 

provisions may be necessary to calculate 

share insurance coverage under the 

current rules. Arrangements involving 

multiple trusts where the same 

beneficiaries are named by the same 

grantor(s) in different trusts add to the 


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48For example, the NCUA currently aggregates 

funds in payable-on-death accounts and funds of 

written revocable trusts for the purposes of share 

insurance coverage, despite their separate and 

distinct legal mechanisms. Also, where the coowners of a revocable trust are also that trust’s sole 

beneficiaries, the NCUA instead insures the trust’s 

funds as joint funds, reflecting the arrangement’s 

substance rather than its legal form. 

49As noted above, if a revocable trust becomes 

irrevocable due to the death of the grantor, the 

account continues to be insured under the 

revocable trust rules. 12 CFR 745.4(h). 

50The death of an account owner can affect share 

insurance coverage, often reducing the amount of 

coverage that applies to a family’s accounts. To 

ensure that families dealing with the death of a 

family member have adequate time to review and 

restructure accounts if necessary, the NCUA insures 

a deceased owner’s accounts as if he/she/they were 

still alive for a period of 6 months after his/her/ 

their death. 12 CFR 745.2(e). 

difficulty of applying the trust rules. 

The NCUA believes simplification of the 

share insurance rules presents an 

opportunity to more closely align the 

coverage provided for different types of 

trust funds. For example, the revocable 

trust rules generally provide for a 

greater amount of coverage than the 

irrevocable trust rules. This outcome 

occurs because contingent interests for 

irrevocable trusts are aggregated and 

insured up to the SMSIA rather than up 

to the SMSIA per beneficiary, while 

contingencies are not considered and 

therefore do not limit coverage in the 

same manner for revocable trusts. 

Finally, as previously noted, adoption 

of the proposed changes would align 

with changes the FDIC adopted in 

January 2022, which are set to take 

effect on April 1, 2024. The Board 

believes it is important to maintain 

parity between the nation’s two Federal 

deposit/share insurance programs. It is 

imperative that members of the public 

who use trust accounts for the transfer 

of ownership of assets better understand 

the rules governing such accounts and 

receive the same protection, whether the 

accounts are maintained at FICUs or 

other federally insured institutions. 

C. Description of Proposed Rule 

The NCUA is proposing to amend the 

rules governing share insurance 

coverage for funds held in trust 

accounts at FICUs. Generally, the 

proposed amendments would: (1) merge 

the revocable and irrevocable trust 

categories into one category; (2) apply a 

simpler, common calculation method to 

determine insurance coverage for funds 

held by revocable and irrevocable trusts; 

and (3) eliminate certain requirements 

found in the current rules for revocable 

and irrevocable trusts. 

Merger of Revocable and Irrevocable 

Trust Categories 

As discussed above, the NCUA 

historically has insured revocable trust 

funds and irrevocable trust funds held 

at FICUs under two separate insurance 

categories. The NCUA’s experience has 

been that this bifurcation often confuses 

FICUs and their members, as it requires 

a threshold inquiry to determine which 

set of rules to apply to a trust account. 

Moreover, all trust funds deposited at a 

FICU must be categorized before the 

aggregation of trust funds deposited 

within each category can be completed. 

The NCUA believes funds held in 

connection with revocable and 

irrevocable trusts are sufficiently 

similar, for the purposes of share 

insurance coverage, to warrant the 

merger of these two categories into one 

category. Under the NCUA’s current 

rules, share insurance coverage is 

provided because the trustee maintains 

the funds for the benefit of the 

beneficiaries. This is true regardless of 

whether the trust is revocable or 

irrevocable. Merger of the revocable and 

irrevocable trust categories would better 

conform share insurance coverage to the 

substance—rather than the legal form— 

of the trust arrangement. This 

underlying principle of the share 

insurance rules is particularly important 

in the context of trusts, as state law 

often provides flexibility to structure 

arrangements in different ways to 

accomplish a given purpose.48

FICU members may have a variety of 

reasons for selecting a particular legal 

arrangement, but that decision should 

not significantly affect share insurance 

coverage. Importantly, the proposed 

merger of the revocable trust and 

irrevocable trust categories into one 

category for share insurance purposes 

would not affect the application or 

operation of state trust law; this would 

only affect the determination of share 

insurance coverage for these types of 

trust funds in the event of a FICU’s 

liquidation. 

Accordingly, the NCUA is proposing 

to amend § 745.4 of its regulations, 

which currently applies only to 

revocable trust accounts, to establish a 

new ‘‘trust accounts’’ category that 

would include both revocable and 

irrevocable trust funds deposited at a 

FICU. The proposed rule defines the 

funds that would be included in this 

category as follows: (1) informal 

revocable trust funds, such as payableon-death accounts, in-trust-for accounts, 

and Totten trust accounts; (2) formal 

revocable trust funds, defined to mean 

funds held pursuant to a written 

revocable trust agreement under which 

funds pass to one or more beneficiaries 

upon the grantor’s death; and (3) 

irrevocable trust funds, meaning funds 

held pursuant to an irrevocable trust 

established by written agreement or by 

statute. 

In addition, the merger of the 

revocable trust and irrevocable trust 

categories eliminates the need for 

§§ 745.4(h) through (i) of the current 

revocable trust rules, which provide that 

the revocable trust rules may continue 

to apply to an account where a formal 

revocable trust becomes irrevocable due 

to the death of one or more of the trust’s 

grantors. These provisions were 

intended to benefit accountholders, who 

sometimes were unaware that a trust 

owner’s death could trigger a significant 

decrease in insurance coverage as a 

revocable trust becomes irrevocable. 

However, in the NCUA’s experience, 

this rule has proven complex in part 

because it results in some irrevocable 

trusts being insured per the revocable 

trust rules, while other irrevocable 

trusts are insured under the irrevocable 

trust rules.49 As a result, an 

accountholder could know a trust was 

irrevocable but not know which share 

insurance rules to apply. The proposed 

rule would insure funds of formal and 

informal revocable trusts and 

irrevocable trusts according to a 

common set of rules, eliminating the 

need for these provisions (§§ 745.4(h) 

through (i)) and simplifying coverage for 

accountholders. Accordingly, the death 

of a formal revocable trust owner would 

not result in a decrease in share 

insurance coverage for the trust. 

Coverage for irrevocable and formal 

revocable trusts would fall under the 

same category and share insurance 

coverage would remain the same, even 

after the expiration of the six-month 

grace period following the death of an 

account owner.50

Informal revocable trust accounts 

would also be insured under this same 

trust account category but are highly 

unlikely to result in the creation of an 

irrevocable trust account upon an owner 

or co-owner’s death. As is the case 

under the existing share insurance 

regulations, when a co-owner of an 

informal revocable trust account dies, 

share insurance coverage for the 

deceased owner’s interest in the account 

will cease after the expiration of the 6- 

month grace period allowed for the 

death of share account owners. After the 

expiration of the 6-month grace period, 

share insurance coverage will be 

calculated as if the deceased co-owner 

did not exist and the deceased coowner’s name did not remain on the 

account. This treatment of the account 

will be based upon the fact that all 

funds in the account will be owned by 


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51 73 FR 60616 (Oct. 14, 2008). 

52For example, two co-grantors that designate 

five beneficiaries are insured for up to $2,500,000 

(2 times 5 times $250,000). 53 87 FR 4455 (Jan. 28, 2022). 

54See 12 CFR 745.4(a) (‘‘All funds that an owner 

holds in both living trust accounts and payable-ondeath accounts, at the same NCUA-insured credit 

union and naming the same beneficiaries, are 

aggregated for insurance purposes and insured to 

the applicable coverage limits. . . .’’). 

55For example, if a grantor maintained both an 

informal revocable trust account with three 

beneficiaries and a formal revocable trust account 

with three separate and unique beneficiaries, the 

two accounts would be aggregated and the 

maximum share insurance available would be $1.25 

million (1 grantor times the SMSIA times the 

number of unique beneficiaries, limited to 5). 

However, if the same three people were the 

beneficiaries of both accounts, the maximum share 

insurance available would be $750,000 (1 grantor 

times the SMSIA times the 3 unique beneficiaries). 

one person (i.e., the surviving coowner). 

Calculation of Coverage 

The NCUA is proposing to use one 

streamlined calculation to determine the 

amount of share insurance coverage for 

funds of both revocable and irrevocable 

trusts. This method is already used by 

the NCUA to calculate coverage for 

revocable trusts that have five or fewer 

beneficiaries, and it is an aspect of the 

rules that is generally well-understood 

by FICUs and their members. The 

proposed rule would provide that a 

grantor’s trust funds are insured in an 

amount up to the SMSIA (currently 

$250,000) multiplied by the number of 

trust beneficiaries, not to exceed five 

beneficiaries. The NCUA would 

presume that, for share insurance 

purposes, the trust provides for equal 

treatment of beneficiaries such that 

specific allocation of the funds to the 

respective beneficiaries will not be 

relevant, consistent with the NCUA’s 

current treatment of revocable trusts 

with five or fewer beneficiaries. This 

would, in effect, limit coverage for a 

grantor’s trust funds at each FICU to a 

total of $1,250,000; in other words, 

maximum coverage would be equivalent 

to $250,000 per beneficiary for up to 

five beneficiaries. In determining share 

insurance coverage, the NCUA would 

continue to consider only beneficiaries 

who are expected to receive the funds 

held by the trust in a member account 

at the FICU; the NCUA would not 

consider beneficiaries who are expected 

to receive only non-deposit assets of the 

trust. 

The NCUA is proposing to calculate 

coverage in this manner, in part, based 

on its experience with the revocable 

trust rules after the modifications to 

these rules in 2008.51 The NCUA has 

found that the share insurance 

calculation method for revocable trusts 

with five or fewer beneficiaries has been 

the most straightforward and is easy for 

FICUs and the public to understand. 

This calculation provides for insurance 

in an amount up to the total number of 

unique grantor-beneficiary trust 

relationships (i.e., the number of 

grantors, multiplied by the total number 

of beneficiaries, multiplied by the 

SMSIA).52 In addition to being simpler, 

this calculation has proven beneficial in 

liquidations, as it leads to more prompt 

share insurance determinations and 

quicker access to insured funds for 

accountholders. Accordingly, the NCUA 

proposes to calculate share insurance 

coverage for trust accounts based on the 

simpler calculation currently used for 

revocable trusts with five or fewer 

beneficiaries. 

The streamlined calculation that 

would be used to determine coverage for 

revocable trust funds and irrevocable 

trust funds includes a limit on the total 

amount of share insurance coverage for 

all of an accountholder’s funds in the 

trust category at the same FICU. The 

proposed rule would provide coverage 

for trust funds at each FICU up to a total 

of $1,250,000 per grantor; in other 

words, each grantor’s insurance limit 

would be $250,000 per beneficiary up to 

a maximum of five beneficiaries. The 

level of five beneficiaries is an 

important threshold in the current 

revocable trust rules, as it defines 

whether a grantor’s coverage is 

determined using the simpler 

calculation of the number of 

beneficiaries multiplied by the SMSIA 

or the more complex calculation 

involving the consideration of the 

amount of each beneficiary’s specific 

interest (which applies when there are 

six or more beneficiaries). The trust 

rules currently limit coverage by tying 

coverage to the specific interests of each 

beneficiary of an irrevocable trust or of 

each beneficiary of a revocable trust 

with more than five beneficiaries. The 

proposed rule’s $1,250,000 per-grantor, 

per-FICU limit is more straightforward 

and balances the objectives of 

simplifying the trust rules, promoting 

timely payment of share insurance, 

facilitating liquidations, ensuring 

consistency with the FCU Act, and 

limiting risk to the Share Insurance 

Fund. The proposed rule would also 

provide parity between the NCUA’s 

regulations and those adopted by the 

FDIC in early 2022.53

The NCUA anticipates that limiting 

coverage to $1,250,000 per grantor, per 

FICU, for trust funds would not have a 

substantial effect on accountholders, as 

most trust accounts in past FICU 

liquidations have had balances well 

below this level. The NCUA lacks 

sufficient information, however, to 

project the exact effects of the proposed 

limit on current accountholders and 

requests that commenters provide 

information that might be helpful in this 

regard. 

Under the proposed rule, to determine 

the level of insurance coverage that 

would apply to funds held in trust 

accounts, accountholders would still 

need to identify the grantors and the 

eligible beneficiaries of the trust. The 

level of coverage that applies to trust 

accounts would no longer be affected by 

the specific allocation of trust funds to 

each of the beneficiaries of the trust or 

by contingencies outlined in the trust 

agreement. Instead, the proposed rule 

would provide that a grantor’s trust 

funds are insured up to a total of 

$1,250,000 per grantor, or an amount up 

to the SMSIA multiplied by the number 

of eligible beneficiaries, with a limit of 

no more than five beneficiaries. 

Aggregation 

The proposed rule also provides for 

the aggregation of funds held in 

revocable and irrevocable trust accounts 

for the purposes of applying the share 

insurance limit. Under the current rules, 

funds held in informal revocable trust 

accounts and formal revocable trust 

accounts are aggregated for this 

purpose.54 The proposed rule would 

aggregate a grantor’s informal and 

formal revocable trust accounts, as well 

as irrevocable trust accounts. For 

example, all informal revocable trusts, 

formal revocable trusts, and irrevocable 

trusts held for the same grantor at the 

same FICU would be aggregated, and the 

grantor’s insurance limit would be 

determined by how many eligible and 

unique beneficiaries were identified 

among all of their trust accounts.55 The 

share insurance coverage provided in 

the ‘‘trust accounts’’ category would 

remain separate from the coverage 

provided for other funds held in a 

different right and capacity at the same 

FICU. However, some accountholders 

who currently maintain both revocable 

trust and irrevocable trust deposits at 

the same FICU may have funds in 

excess of the insurance limit if these 

separate categories are combined. The 

NCUA lacks data on accountholders’ 

trust arrangements that would allow it 

to estimate the number of 

accountholders who might be affected 

in this manner. The agency does not 

believe this would impact a substantial 

number of accountholders but requests 


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56 12 CFR 754.4(c). 

57See NCUA Your Insured Funds at 42 (‘‘The 

beneficiaries are the people or entities entitled to 

an interest in the trust. Contingent or alternative 

trust beneficiaries are not considered to have an 

interest in the trust funds and other assets as long 

as the primary or initial beneficiaries are still living, 

with the exception of revocable living trusts with 

a life estate interest.’’). 

58See 74 FR 55747, 55748 (Oct. 29, 2009). 

59See 12 CFR 745.2(d)(4). 

60 12 CFR 745.4(d). 

61 In the unlikely event a trust does not name any 

eligible beneficiaries, the NCUA would treat the 

funds in the trust account as funds held in a single 

ownership account. Such funds would be 

aggregated with any other single ownership funds 

that the grantor maintains at the same FICU and 

insured up to the SMSIA of $250,000. 

62See 12 CFR 745.4(b). 

63See 12 CFR 745.4(f). 

64https://mycreditunion.gov/sites/default/staticfiles/insured-funds-brochure.pdf. 

that commenters provide information 

that might be helpful in this regard. 

Eligible Beneficiaries 

Currently, the revocable trust rules 

provide that eligible beneficiaries 

include natural persons, charitable 

organizations, and non-profit entities 

recognized as such under the Internal 

Revenue Code of 1986,56 while the 

irrevocable trust rules do not establish 

criteria for beneficiaries. The NCUA 

believes that a single definition should 

be used to determine whether an entity 

is an eligible beneficiary for all trust 

funds and proposes to use the current 

revocable trust rule’s definition. The 

NCUA believes that this single 

definition will result in a change in 

share insurance coverage only in very 

rare cases. 

The proposed rule also would exclude 

from the calculation of share insurance 

coverage beneficiaries who only would 

obtain an interest in a trust if one or 

more named beneficiaries are deceased 

(often referred to as contingent 

beneficiaries). In this respect, the 

proposed rule would codify existing 

practice to include only primary, unique 

beneficiaries in the share insurance 

calculation.57 This would not represent 

a substantive change in coverage. 

Consistent with treatment under the 

current trust rules, naming a chain of 

contingent beneficiaries that would 

obtain trust interests only in the event 

of a beneficiary’s death would not 

increase share insurance coverage. 

Finally, the proposed rule would 

codify an interpretation of the trust 

rules where an informal revocable trust 

designates the depositor’s formal trust 

as its beneficiary. A formal trust 

generally does not meet the definition of 

an eligible beneficiary for share 

insurance purposes, but the NCUA has 

treated such accounts as revocable trust 

accounts under the trust rules, insuring 

the account as if it were titled in the 

name of the formal trust.58

Retained Interests and Ineligible 

Beneficiaries’ Interests 

The current trust rules provide that, 

in some instances, funds corresponding 

to specific beneficiaries are aggregated 

with a grantor’s single ownership 

deposits at the same FICU for the 

purposes of the share insurance 

calculation. These instances include a 

grantor’s retained interest in an 

irrevocable trust 59 and interests of 

beneficiaries who do not satisfy the 

definition of ‘‘beneficiary.’’ 60 This adds 

complexity to the share insurance 

calculation, as a detailed review of a 

trust agreement may be required to 

value such interests so they may be 

aggregated with a grantor’s other funds. 

To implement the streamlined 

calculation for funds held in trust 

accounts, the NCUA is proposing to 

eliminate these provisions. Under the 

proposed rule, the grantor and other 

beneficiaries who do not satisfy the 

definition of ‘‘eligible beneficiary’’ 

would not be included for the purposes 

of the share insurance calculation.61

Importantly, this would not in any way 

limit a grantor’s ability to establish such 

trust interests under state law. These 

interests simply would not factor into 

the calculation of share insurance 

coverage. 

Future Trusts Named as Beneficiaries 

Trusts often contain provisions for the 

establishment of one or more new trusts 

upon the grantor’s death, and the 

proposed rule also would clarify share 

insurance coverage in these situations. 

Specifically, if a trust agreement 

provides that trust funds will pass into 

one or more new trusts upon the death 

of the grantor (or grantors), the future 

trust (or trusts) would not be treated as 

beneficiaries for the purposes of the 

calculation. The future trust(s) instead 

would be considered mechanisms for 

distributing trust funds, and the natural 

persons or organizations that receive the 

trust funds through the future trusts 

would be considered the beneficiaries 

for the purposes of the share insurance 

calculation. This clarification is 

consistent with the NCUA’s current 

interpretations and would not represent 

a substantive change in share insurance 

coverage. 

Naming of Beneficiaries in Share 

Account Records 

Consistent with the current revocable 

trust rules, the proposed rule would 

continue to require the beneficiaries of 

an informal revocable trust to be 

specifically named in the account 

records of the FICU.62 The NCUA does 

not believe this requirement imposes a 

burden on FICUs, as informal revocable 

trusts by their nature require the FICU 

to be able to identify the individuals or 

entities to which funds would be paid 

upon the accountholder’s death. 

Presumption of Ownership 

The proposed rule also would state 

that, unless otherwise specified in a 

FICU’s account records, funds held in 

an account for a trust established by 

multiple grantors are presumed to be 

owned in equal shares. This 

presumption is consistent with the 

current revocable trust rules.63

Funds Covered Under Other Rules 

The proposed rule would exclude 

from coverage under § 745.4 certain 

trust funds that are covered by other 

sections of the share insurance 

regulations. For example, employee 

benefit plan accounts are insured 

pursuant to current § 745.9–2. In 

addition, if the co-owners of an informal 

or formal revocable trust are the trust’s 

sole beneficiaries, funds held in 

connection with the trust would be 

treated as a joint ownership account 

under § 745.8. In each of these cases, the 

NCUA is not proposing to change the 

current rule. 

Removal of the Appendix to Part 745 

Finally, the NCUA is proposing to 

remove the appendix to part 745, which 

provides examples of share insurance 

coverage. The NCUA plans to update its 

Your Insured Funds brochure to reflect 

any amendments made to part 745.64

The Board believes an updated brochure 

and other updated resources available 

on mycreditunion.gov will provide a 

more consumer friendly and easier-toupdate avenue for providing examples 

of share insurance coverage. 

The NCUA is also proposing to 

remove references to the appendix in 

the heading of part 745 and § 745.0, 

§ 745.2, and § 745.13. This would mean 

that provision of the appendix would no 

longer satisfy the notification to 

members/shareholders requirement in 

§ 745.13. Instead, FICUs would have to 

make available either the rules in part 

745 of the NCUA’s regulations or the 

Your Insured Funds brochure. 

Conforming Changes 

The proposed simplification of the 

calculation for insurance coverage for 

funds held in trust accounts also would 

permit the elimination of current 

§ 745.2(d) of the regulations addressing 


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the valuation of trust interests. As 

discussed further below, the description 

of non-contingent interests in 

§§ 745.2(d)(1) and (2) would no longer 

be relevant to trust accounts under the 

proposed rule. Additionally, 

§ 745.2(d)(3) regarding the deemed pro 

rata contribution of settlors to a trust 

would be replaced by proposed 

§ 745.4(b)(4), which would presume 

equal allocation. Section 745.2(d)(4) 

defining a ‘‘trust interest’’ would be 

replaced by the proposed definition of 

‘‘irrevocable trust’’ in § 745.4(a)(3). 

Regarding non-contingent interests, 

the NCUA is also proposing to move the 

current description of a non-contingent 

interest in § 745.2(d)(1) to the 

definitions section of part 745. The new 

definition of ‘‘non-contingent interest’’ 

in § 745.1 would remain substantively 

the same but would now only be 

relevant to evaluating participants’ noncontingent interests in shares of an 

employee benefit plan under § 745.9– 

2(a). The proposed definition of ‘‘noncontingent interest’’ would add 

language to include any present worth 

or life expectancy tables that the IRS 

may adopt that are similar to those set 

forth in § 20.2031–7 of the Federal 

Estate Tax Regulations (26 CFR 

20.2031–7). This is not intended to be 

a substantive change but is instead 

intended to provide flexibility should 

the IRS make any changes. As part of 

this change, the NCUA is also proposing 

to make non-substantive changes to 

§ 745.1 to improve readability. 

Additionally, the NCUA proposes to 

remove the reference to § 745.2 in 

current § 745.9–2. 

Finally, the NCUA is proposing to 

redesignate current § 745.9–2 as § 745.9 

to reflect the elimination of current 

§ 745.9–1 governing irrevocable trust 

accounts. The reference in § 745.9–2(a) 

to § 745.2 would also be removed to 

reflect the elimination of the description 

of a non-contingent interest in current 

§ 745.2(d) and adoption of a definition 

of ‘‘non-contingent interest’’ in 

proposed § 745.1. 

D. Examples Demonstrating Coverage 

Under Current and Proposed Rules 

To assist commenters, the NCUA is 

providing examples demonstrating how 

the proposed rule would apply to 

determine share insurance coverage for 

funds held in trust accounts. These 

examples are not intended to be allinclusive; they merely address a few 

possible scenarios involving funds held 

in trust accounts. The NCUA expects 

that for most accountholders, insurance 

coverage would not change under the 

proposed rule. The examples here 

specifically highlight a few instances 

where coverage could be reduced to 

ensure that commenters are aware of 

them. 

In addition, all examples involve 

members or those otherwise entitled to 

maintain insured accounts at the FICU. 

It is worth reiterating that share 

insurance coverage is only available to 

FICU members and those otherwise 

entitled to maintain insured accounts. 

For revocable trust accounts, all grantors 

must be members of the FICU or 

otherwise eligible to maintain an 

insured account to receive share 

insurance coverage. In the case of an 

irrevocable trust account, all grantors or 

all beneficiaries must be members of the 

FICU or otherwise eligible to maintain 

an insured account to receive share 

insurance coverage. Where a revocable 

trust account has become irrevocable 

because of the death of a grantor, the 

deceased grantor’s membership will 

continue to satisfy their membership 

requirement as long as the trust account 

continues to be maintained at the FICU. 

Example 1: Payable-on-Death Account 

Member A establishes a payable-ondeath account at a FICU. Member A has 

designated three beneficiaries for this 

account—B, C, and D—who will receive 

the funds upon member A’s death and 

listed all three on a form provided to the 

FICU. The only other share account that 

member A maintains at the same FICU 

is a share draft account with no 

designated beneficiaries. What is the 

maximum amount of share insurance 

coverage for member A’s shares at the 

FICU? 

Under the proposed rule, member A’s 

payable-on-death account represents an 

informal revocable trust and would be 

insured in the trust accounts category. 

The maximum coverage for this account 

would be equal to the SMSIA (currently 

$250,000) multiplied by the number of 

grantors (in this case one because 

member A established the account) 

multiplied by the number of 

beneficiaries, up to a maximum of five 

(here three, the number of beneficiaries 

is less than five). Member A’s payableon-death account would be insured for 

up to ($250,000) times (1) times (3) = 

$750,000. 

The coverage for member A’s payableon-death account is separate from the 

coverage provided for member A’s share 

draft account, which would be insured 

in the single ownership category 

because she has not named any 

beneficiaries for that account. The single 

ownership share draft account would be 

insured up to the SMSIA, $250,000. 

Member A’s total insurance coverage for 

shares at the FICU would be $750,000 

+ $250,000 = $1,000,000. Notably, this 

level of coverage is the same as that 

provided by the current share insurance 

rules. 

Example 2: Formal Revocable Trust and 

Informal Revocable Trust 

Members E and F jointly establish a 

payable-on-death account at a FICU. 

Members E and F have designated three 

beneficiaries for this account—G, H, and 

I—who will receive the funds after both 

members E and F are deceased. They list 

these beneficiaries on a form provided 

to the FICU. Members E and F also 

jointly establish an account titled in the 

name of the ‘‘E and F Living Trust’’ at 

the same FICU. Members E and F are the 

grantors of the living trust, a formal 

revocable trust that includes the same 

three beneficiaries, G, H, and I. The 

grantors, members E and F, do not 

maintain any other share accounts at 

this same FICU. What is the maximum 

amount of share insurance coverage for 

members E and F’s shares? 

Under the proposed rule, members E 

and F’s payable-on-death account 

represents an informal revocable trust 

and would be insured in the trust 

accounts category. Members E and F’s 

living trust account constitutes a formal 

revocable trust and would also be 

insured in the trust accounts category. 

To the extent the funds in these 

accounts would pass from the same 

grantor (E or F) to beneficiaries (G, H, 

and I), the funds would be aggregated 

for the purpose of applying the share 

insurance limit. As under the current 

rules, it would be irrelevant that the 

grantors’ shares are divided between the 

payable-on-death account and the living 

trust account. 

The maximum coverage for members 

E and F’s shares would be equal to the 

SMSIA ($250,000) multiplied by the 

number of grantors (two, because 

members E and F are the grantors with 

respect to both accounts) multiplied by 

the number of unique beneficiaries, up 

to a maximum of five (here three, the 

number of beneficiaries, is less than 

five). Therefore, the coverage for E and 

F’s trust accounts would be: ($250,000) 

times (2) times (3) = $1,500,000. This 

level of coverage is the same as that 

provided by the current share insurance 

rules. 

Example 3: Two-Owner Trust and a 

One-Owner Trust 

Members J and K jointly establish a 

payable-on-death account at a FICU. 

Members J and K have designated three 

beneficiaries for this account—L, M, and 

N—who will receive the funds after 

both J and K are deceased. They list 

these beneficiaries on a form provided 

to the FICU. At the same FICU, member 


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65For example, if all the beneficiaries’ interests 

were equal, coverage would be: $250,000 times (7 

beneficiaries) = $1,750,000. This is the maximum 

coverage possible under the current rule. 

Conversely, if a few beneficiaries had a large 

interest in the trust, the total of all beneficiaries’ 

interests (limited to the SMSIA per beneficiary) 

could be less than $1,250,000, in which case the 

current rule would provide a minimum of 

$1,250,000 in coverage. Depending upon the precise 

allocation of interests, the amount of coverage 

provided would fall somewhere within this range. 

J establishes a payable-on-death account 

and designates member K as the 

beneficiary upon J’s death. What is the 

maximum amount of coverage for 

members J and K’s shares? 

Under the proposed rule, both 

accounts would be insured under the 

trust account category. To the extent 

these shares would pass from the same 

grantor (J or K) to beneficiaries (such as 

L, M, and N), they would be aggregated 

for the purpose of applying the share 

insurance limit. For example, member K 

identified three beneficiaries (L, M, and 

N), and therefore, member K’s insurance 

limit is $750,000 (or 1 times 3 times 

SMSIA). Member K would be fully 

insured as long as one-half interest of 

the co-owned trust account was 

$750,000 or less, which is the same 

level of coverage provided under 

current rules. In this example, member 

J’s situation differs from member K’s 

because J has a second trust account, but 

the insurance calculation remains the 

same. Specifically, member J has two 

trust accounts and identified four 

unique beneficiaries (L, M, N, and K); 

therefore, member J’s insurance limit is 

$1,000,000 (or 1 times 4 times SMSIA). 

Member J would remain fully insured as 

long as J’s trust shares—equal to onehalf of the co-owned trust account plus 

J’s personal trust account—total no more 

than $1,000,000. This methodology and 

level of coverage is the same as that 

provided by the current share insurance 

rules. 

Example 4: Revocable and Irrevocable 

Trusts 

Member O establishes a share account 

at a FICU titled the ‘‘O Living Trust.’’ 

Member O is the grantor of this living 

trust, a formal revocable trust that 

includes three beneficiaries—P, Q, and 

R. The grantor, member O, also 

establishes an irrevocable trust for the 

benefit of the same three beneficiaries. 

The trustee of the irrevocable trust 

maintains a share account at the same 

FICU as the living trust account, titled 

in the name of the irrevocable trust. 

Neither member O nor the trustee 

maintains other share accounts at the 

same FICU. What is the insurance 

coverage for these accounts? 

Under the proposed rule, the living 

trust account is a formal revocable trust 

and would be insured in the trust 

accounts category. The account 

containing the funds from the 

irrevocable trust account would also be 

insured in the trust accounts category. 

To the extent these shares would pass 

from the same grantor (member O) to 

beneficiaries (P, Q, or R), they would be 

aggregated for the purposes of applying 

the share insurance limit. It would be 

irrelevant that the shares are divided 

between the living trust account and the 

irrevocable trust account. The maximum 

coverage for these shares would be 

equal to the SMSIA ($250,000) 

multiplied by the number of grantors 

(one, because member O is the grantor 

with respect to both accounts) 

multiplied by the number of 

beneficiaries, up to a maximum of five 

(here three, the number of beneficiaries, 

is less than five). Therefore, the 

maximum coverage for the shares in the 

trust accounts would be: ($250,000) 

times (1) times (3) = $750,000. 

This is one of the isolated instances 

where the proposed rule may provide a 

reduced amount of coverage as a result 

of the aggregation of revocable and 

irrevocable trust accounts, depending 

on the structure of the trust agreement. 

Under the current rules, member O 

would be insured for up to $750,000 for 

revocable trust shares and separately 

insured for up to $750,000 for 

irrevocable trust shares (assuming noncontingent beneficial interests), 

resulting in $1,500,000 in total coverage. 

If that were the case, current coverage 

would exceed that provided by the 

proposed rule. However, the terms of 

irrevocable trusts sometimes lead to less 

coverage than expected. It is often the 

case that irrevocable trust accounts are 

only insured up to $250,000 under the 

current rules due to contingencies in the 

trust agreement, but determining this 

with certainty often requires careful 

consideration of the trust agreement’s 

contingency provisions. Under the 

current rule, if contingencies existed, 

current coverage would exceed that 

provided by the proposed rule, as 

member O would be insured up to 

$1,000,000; $750,000 for the revocable 

trust and $250,000 for the irrevocable 

trust. In the NCUA’s view, one of the 

key benefits of the proposed rule versus 

the current rule would be greater clarity 

and predictability in share insurance 

coverage because whether contingencies 

exist would no longer be a factor that 

could affect share insurance. 

Example 5: Many Beneficiaries Named 

Member S establishes a share account 

at a FICU titled in the name of the ‘‘S 

Living Trust.’’ This trust is a revocable 

trust naming seven beneficiaries—T, U, 

V, W, X, Y, and Z. The grantor, member 

S, does not maintain any other shares at 

the same FICU. What is the coverage for 

this account? 

Under the proposed rule, the living 

trust is a formal revocable trust and 

would be insured in the trust accounts 

category. The maximum coverage for 

this account would be equal to the 

SMSIA ($250,000) multiplied by the 

number of grantors (one, because 

member S is the sole grantor) multiplied 

by the number of beneficiaries, up to a 

maximum of five. Here the number of 

named beneficiaries (seven) exceeds the 

maximum (five), so insurance is 

calculated using the maximum (five). 

Coverage for the account would be: 

($250,000) times (1) times (5) = 

$1,250,000. 

This is another limited instance 

where the proposed rule may provide 

for less coverage than the current rule. 

Under the current rule, because more 

than five beneficiaries are named, the 

account is insured up to the greater of 

the following: (1) five times the SMSIA; 

or (2) the total of the interests of each 

beneficiary, with each such interest 

limited to the SMSIA. Determining 

coverage requires review of the trust 

agreement to ascertain each 

beneficiary’s interest. Each such 

insurable interest is limited to the 

SMSIA, and the total of all these 

interests is compared with $1,250,000 

(five times the SMSIA). The current rule 

provides coverage in the greater of these 

two amounts. The result would fall into 

a range from $1,250,000 to $1,750,000, 

depending on the precise allocation of 

trust interests among the beneficiaries.65

In the NCUA’s view, one of the key 

benefits of the proposed rule versus the 

current rule would be greater clarity and 

predictability in share insurance 

coverage because a single formula 

would be used to determine maximum 

coverage, and this formula would not 

depend upon the specific allocation of 

funds among beneficiaries. 

E. Request for Comment 

The NCUA is requesting comment on 

all aspects of the proposed rule. 

Comment is specifically invited with 

respect to the following questions: 

• Would the proposed amendments 

to the share insurance rules make 

insurance coverage for trust accounts 

easier to understand for FICUs and the 

public? 

• The NCUA believes that 

accountholders generally would have 

the information necessary to readily 

calculate share insurance coverage for 

their trust accounts under the proposed 

rule, allowing them to better understand 


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66See 12 CFR 745.8(e) (‘‘A nonmember may 

become a joint owner with a member on a joint 

account with right of survivorship. The 

nonmember’s interest in such accounts will be 

insured in the same manner as the member jointowner’s interest.’’). 67 12 CFR 745.3(a)(3). 

68 87 FR 4455 (Jan. 28, 2022). 

69 See 73 FR 61658, 61658–59 (Oct. 17, 2008). 

70 73 FR 62856, 62857 (Oct. 22, 2008). 

insurance coverage for their trust 

accounts. Are there instances where an 

accountholder would not likely have the 

necessary information? 

• Are there any other types of trusts 

not described in this proposal whose 

funds maintained in FICU accounts 

would be affected by the proposed rule 

if adopted? What types of trusts are 

those, and how would they be 

impacted? 

• While the NCUA has substantial 

experience regarding trust 

arrangements, the NCUA does not 

possess sufficiently detailed information 

on accountholders’ existing trust 

arrangements to allow the NCUA to 

project the proposed rule’s effects on 

current accountholders. Are there any 

other sources of empirical information 

the NCUA should consider that may be 

helpful in understanding the effects of 

the proposed rule? The NCUA also 

encourages commenters to provide such 

information, if possible. 

• Grandfathering of the share 

insurance rules would result in 

significantly greater complexity for the 

period during which two sets of rules 

could apply to accounts—especially in 

conducting liquidations. Therefore, the 

NCUA is not inclined to consider 

allowing grandfathering but prefers to 

rely on a delayed implementation date 

to allow stakeholders to make necessary 

adjustments because of the new rules. 

However, the NCUA recognizes there 

are instances, such as trusts holding 

share certificates or other account 

relationships, which may not be easily 

restructured without adverse 

consequences to the accountholder. Are 

there fact patterns where grandfathering 

the current rules may be appropriate? 

Would grandfathering be appropriate 

with respect to the proposed rule’s 

coverage limit of $1,250,000 per FICU 

for an accountholder’s funds held in 

trust accounts? 

• Are the examples provided clear 

and understandable? Are there other 

common trust scenarios that would 

benefit from an example being 

provided? 

• Historically, the NCUA has 

maintained the position that the 

membership requirement for a revocable 

trust account is satisfied when all 

grantors (sometimes described as 

settlors) of the trust are members of the 

FICU or otherwise eligible to maintain 

an insured account. For an irrevocable 

trust account, the NCUA has said that 

the membership requirement is satisfied 

if either all the grantors/settlors or all 

the beneficiaries of the trust are 

members of the FICU or otherwise 

eligible to maintain an insured account. 

Are there alternatives the NCUA should 

consider for fulfilling the membership 

requirement for share insurance 

coverage of revocable and irrevocable 

trust accounts? Should informal 

revocable trust accounts that are 

established with a right of survivorship 

be treated akin to joint accounts with 

member and nonmember co-owners 

who own the account with a right of 

survivorship? 66 Should a trustee who 

deposits funds at a FICU pursuant to a 

revocable or irrevocable trust they 

administer be considered to be 

maintaining a member account, 

providing share insurance coverage to 

eligible beneficiaries? 

• Are there any other amendments to 

the share insurance rules applicable to 

trusts that the NCUA should consider? 

III. Amendments to Mortgage Servicing 

Account Rule 

A. Policy Objectives 

The NCUA’s regulations governing 

share insurance coverage include 

specific rules on accounts maintained at 

FICUs by mortgage servicers.67 These 

rules are intended to be easy to 

understand and apply in determining 

the amount of share insurance coverage 

for a mortgage servicer’s account. The 

NCUA generally strives to maintain 

parity with FDIC’s regulations in 

furtherance of this aim. 

The NCUA is proposing an 

amendment to its rules governing 

insurance coverage for accounts 

maintained at FICUs by mortgage 

servicers that consist of mortgagors’ 

principal and interest payments. The 

proposed rule would mirror a change 

made by the FDIC in early 2022,68

scheduled to become effective in April 

2024, intended to address a servicing 

arrangement that is not addressed in the 

current rules. Specifically, some 

servicing arrangements may permit or 

require servicers to advance their own 

funds to the lenders when mortgagors 

are delinquent in making principal and 

interest payments, and servicers might 

commingle such advances in the 

mortgage servicing account (MSA) with 

principal and interest payments 

collected directly from mortgagors. The 

FDIC reasoned that the factors that 

motivated the FDIC to establish its 

current rules for mortgage servicing 

accounts, which the NCUA also adopted 

and are further described below, weigh 

in favor of treating funds advanced by 

a mortgage servicer in order to satisfy 

mortgagors’ principal and interest 

obligations to the lender as if such funds 

were collected directly from borrowers. 

The FDIC also noted that it seeks to 

avoid uncertainty concerning the extent 

of deposit insurance coverage for such 

accounts. The NCUA concurs with the 

importance of avoiding uncertainty 

regarding the extent of insurance 

coverage and believes that an important 

aspect of avoiding uncertainty is 

maintaining parity between the share 

insurance and deposit insurance 

regimes. 

B. Background and Need for 

Rulemaking 

The NCUA’s rules governing coverage 

for MSAs were last amended in 2008 

and corresponded to changes made by 

the FDIC. More specifically, in 2008 the 

FDIC recognized that securitization 

methods and vehicles for mortgages had 

become more complex, exacerbating the 

difficulty of determining the ownership 

of deposits consisting of principal and 

interest payments by mortgagors and 

extending the time required to make a 

deposit insurance determination for 

deposits of a mortgage servicer in the 

event of an insured depository 

institution’s (IDI’s) failure.69 The FDIC 

expressed concern that a lengthy 

insurance determination could lead to 

continuous withdrawal of deposits of 

principal and interest payments from 

IDIs and unnecessarily reduce a funding 

source for such institutions. The FDIC 

therefore amended its rules to provide 

coverage to lenders based on each 

mortgagor’s payments of principal and 

interest into the MSA, up to the 

standard maximum deposit insurance 

amount (SMDIA) (currently $250,000) 

per mortgagor. The FDIC did not amend 

the rule for coverage of tax and 

insurance payments, which continued 

to be insured to each mortgagor on a 

pass-through basis and aggregated with 

any other deposits maintained by each 

mortgagor at the same IDI in the same 

right and capacity. The NCUA agreed 

that this treatment of principal and 

interest payments provided greater and 

fairer coverage for credit union members 

and decided to take the same approach 

in its share insurance rules.70

Importantly, the 2008 amendments to 

the rules for MSAs did not provide for 

the fact that servicers may be required 

to advance their own funds to make 

payments of principal and interest on 

behalf of delinquent borrowers to the 

lenders. However, in its recent 

rulemaking the FDIC identified that this 


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71The FDIC noted that, to fulfill their contractual 

obligations with investors, covered IDIs maintain 

mortgage principal and interest balances at a pool 

level and remittances, advances, advance 

reimbursements, and excess funds applications that 

affect pool-level balances are not allocated back to 

individual borrowers. 

72 12 CFR 745.2. 

73 12 CFR 745.2(c). 

is required of mortgage servicers in 

some instances. For example, the FDIC 

noted that some IDIs identified 

challenges to implementing certain 

recordkeeping requirements with 

respect to MSA deposit balances 

because of the way in which servicer 

advances are administered and 

accounted.71

The NCUA’s and the FDIC’s rules 

currently in effect provide coverage for 

principal and interest funds only to the 

extent ‘‘paid into the account by the 

mortgagors’’; they do not provide 

coverage for funds paid into the account 

from other sources, such as the 

servicer’s own operating funds, even if 

those funds satisfy mortgagors’ principal 

and interest payments. As a result, 

advances are not provided the same 

level of coverage as other deposits in an 

MSA consisting of principal and interest 

payments directly from the borrower, 

which are insured up to the SMSIA/ 

SMDIA for each borrower. Instead, the 

advances are aggregated and insured to 

the servicer as corporate funds for a 

total of $250,000. In adopting changes to 

its rule in early 2022, the FDIC 

expressed concern that this inconsistent 

treatment of principal and interest 

amounts could result in financial 

instability during times of stress, and 

could further complicate the insurance 

determination process, a result that is 

inconsistent with their policy objective. 

The NCUA shares these concerns and 

believes it is important that parity is 

maintained between the insurance 

regimes. 

C. Description of Proposed Rule 

The NCUA is proposing to amend the 

rules governing coverage for funds in 

MSAs to provide parity with the FDIC’s 

regulation and provide consistent share 

insurance treatment for all MSA 

balances held to satisfy principal and 

interest obligations to a lender, 

regardless of whether those funds are 

paid into the account by borrowers, or 

paid into the account by another party 

(such as the servicer) to satisfy a 

periodic obligation to remit principal 

and interest due to the lender. Under 

the proposed rule, accounts maintained 

by a mortgage servicer in an agency, 

custodial, or fiduciary capacity, which 

consist of payments of principal and 

interest, would be insured for the 

cumulative balance paid into the 

account to satisfy principal and interest 

obligations to the lender, whether paid 

directly by the borrower or by another 

party, up to the limit of the SMSIA per 

mortgagor. Mortgage servicers’ advances 

of principal and interest funds on behalf 

of delinquent borrowers would therefore 

be insured up to the SMSIA per 

mortgagor, consistent with the coverage 

rules for payments of principal and 

interest collected directly from 

borrowers. 

The composition of an MSA 

attributable to principal and interest 

payments would also include 

collections by a servicer, such as 

foreclosure proceeds, that are used to 

satisfy a borrower’s principal and 

interest obligation to the lender. In some 

cases, foreclosure proceeds may not be 

paid directly by a mortgagor. The 

current rule does not address whether 

foreclosure collections represent 

payments of principal and interest by a 

mortgagor. Under the proposed rule, 

foreclosure proceeds used to satisfy a 

borrower’s principal and interest 

obligation would be insured up to the 

limit of the SMSIA per mortgagor. 

The proposed rule would make no 

change to the share insurance coverage 

provided for MSAs comprised of 

payments from mortgagors of taxes and 

insurance premiums. Such aggregate 

escrow accounts are held separately 

from the principal and interest MSAs, 

and the funds therein are held for the 

mortgagors until such time as tax and 

insurance payments are disbursed by 

the servicer on the borrower’s behalf. 

Under the proposed rule, such funds 

would continue to be insured based on 

the ownership interest of each 

mortgagor in the account and aggregated 

with other funds maintained by the 

mortgagor at the same FICU in the same 

capacity and right. 

D. Request for Comment 

The NCUA is requesting comment on 

all aspects of the proposed rule. 

Comment is specifically invited with 

respect to the following questions: 

• Would the proposed amendments 

to the rules governing coverage for 

MSAs adequately address servicers’ 

practices with respect to these accounts, 

as described above? Are there any other 

funds representing principal and 

interest that are commingled with 

borrowers’ payments that the NCUA 

should consider in the share insurance 

calculation, consistent with its policy 

objectives? 

• Would share insurance coverage of 

servicer principal and interest advances 

help to promote financial stability in the 

financial system? If the NCUA does not 

amend the rule as proposed, how would 

mortgage servicers react if their FICU, or 

the credit union industry as a whole, 

appears stressed? How would funding 

arrangements or deposit relationships 

change? 

• Are there any alternatives to the 

proposed rule that would better achieve 

the NCUA’s policy objectives in 

connection with this rulemaking? Are 

there any other amendments to the 

share insurance rules applicable to 

MSAs that the NCUA should consider? 

• If the NCUA opts to issue a final 

rule adopting the proposed change is 

there any reason to delay its effective 

date, as is being contemplated for the 

proposed changes to trust accounts? Or 

should the NCUA make the change 

effective as soon as possible? 

IV. Recordkeeping Requirements 

A. Policy Objectives 

The NCUA’s regulations governing 

share insurance coverage include 

general principles applicable in 

determining insurance of accounts.72

Among these general principles are 

provisions addressing recordkeeping.73

The NCUA intends for these provisions 

to clearly articulate the records the 

agency will look to in order to evaluate 

insurance coverage. As discussed in 

more detail below, over time it has 

become apparent that the recordkeeping 

provisions do not clearly address all 

situations and may be especially unclear 

as to accounts maintained by an agent, 

custodian, fiduciary, or other party on 

behalf of a member or beneficial owner 

eligible to maintain an insured account 

at a FICU. To better address these 

situations, the NCUA proposes to 

amend the recordkeeping requirements 

as discussed below. 

B. Background and Need for 

Rulemaking 

Section 745.2(c) of the NCUA’s 

regulations addresses general 

recordkeeping requirements. Other 

recordkeeping requirements applicable 

to specific account types are addressed 

as needed in the relevant sections of 

part 745. Current § 745.2(c)(1) provides 

that, as a general matter, the account 

records of the FICU shall be conclusive 

as to the existence of any relationship 

pursuant to which the funds in the 

account are deposited and on which a 

claim for insurance coverage is founded. 

Examples would be trustee, agent, 

custodian, or executor. No claim for 

insurance based on such a relationship 

will be recognized in the absence of 

such disclosure. 

Section 745.2(c)(2) provides that, if 

the account records of a FICU disclose 


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74NCUA Legal Op. 97–0909 (Feb. 6, 1998), 

available at https://www.ncua.gov/regulationsupervision/legal-opinions/1997/pass-throughinsurance. 

75 12 CFR 330.5(b)(2). 

76 51 FR 21137 (June 11, 1986). 

77See 12 CFR 330.1 (‘‘Deposit account records 

means account ledgers, signature cards, certificates 

of deposit, passbooks, corporate resolutions 

authorizing accounts in the possession of the 

insured depository institution and other books and 

records of the insured depository institution, 

including records maintained by computer, which 

relate to the insured depository institution’s deposit 

taking function, but does not mean account 

statements, deposit slips, items deposited or 

cancelled checks.’’). 

78See 12 CFR 330.5(b)(3). 

79See 12 CFR part 370. 

the existence of a relationship which 

may provide a basis for additional 

insurance, as required under 

§ 745.2(c)(1), the details of the 

relationship and the interest of other 

parties in the account must be 

ascertainable either from the records of 

the FICU or the records of the member 

maintained in good faith and in the 

regular course of business. It is this 

provision that has raised questions 

regarding accounts maintained by an 

agent, fiduciary, or similar party. 

Specifically, the NCUA has received 

several questions regarding whether 

records maintained by an agent, 

fiduciary, or similar third party on 

behalf of the member or beneficial 

owner eligible to maintain an insured 

account would qualify as the ‘‘records of 

the member.’’ Due to the frequency with 

which these agent or fiduciary 

arrangements will involve a party other 

than the FICU or member maintaining 

records on the FICU’s or member’s 

behalf, the NCUA is proposing to add 

language explicitly clarifying that such 

records, when maintained in good faith 

and in the regular course of business, 

can be looked to when evaluating the 

details of the relationship and the 

interest of other parties in the account 

at the FICU. 

C. Description of Proposed Rule 

Section 745.3(a)(2) of the NCUA’s 

regulations provides that when an 

account is held by an agent or nominee, 

funds owned by a principal and 

deposited in one or more accounts in 

the name or names of agents or 

nominees shall be added to any 

individual account of the principal and 

insured up to the SMSIA in the 

aggregate. The NCUA will also generally 

look to the principal or beneficial owner 

for satisfying the membership 

requirement or other eligibility to 

maintain an insured account at the 

FICU. As such, records maintained by 

an agent or nominee on behalf of the 

member principal or beneficial owner 

may not clearly be considered ‘‘records 

of the member’’ for the purpose of 

ascertaining their interests in the 

account under current § 745.2(c)(2). 

The NCUA’s Office of General 

Counsel has previously issued a legal 

opinion stating that where an agent or 

custodian ‘‘has an agreement with the 

beneficial owner/member to maintain 

custody of the beneficial owner/ 

member’s records, [the] NCUA would 

consider those records to be ‘records of 

the member’ within the meaning of 12 

CFR 745(c)(2).’’ 74 However, the NCUA 

acknowledges that it would be 

beneficial for the regulation to more 

clearly address this situation to allow 

the details of the relationship and the 

interests of other parties in the account 

to be ascertainable either from the 

account records of the FICU or from 

records maintained, in good faith and in 

the regular course of business, by the 

member or by some person or entity that 

has undertaken to maintain such 

records for the member. Such a change 

would provide much greater clarity, 

particularly in the event of multi-tiered 

fiduciary relationships, and would more 

closely compare to language previously 

adopted by the FDIC.75 Importantly, the 

NCUA retains discretion to determine 

when records are maintained on behalf 

of a member, in good faith and in the 

regular course of business. Ultimately, 

the NCUA must be able to establish 

ownership interests in the account by 

following the chain of records 

maintained by parties at each level of 

the relationship from the account 

records maintained at the FICU. 

Additionally, § 745.2(c)(3) of the 

current regulations provides that the 

account records of a FICU in connection 

with a trust account shall disclose the 

name of both the settlor (grantor) and 

the trustee of the trust and shall contain 

an account signature card executed by 

the trustee. This requirement goes 

beyond the recordkeeping requirements 

of § 745.2(c)(1) through (2) and poses an 

unnecessary burden on FICUs and their 

members. Further, the FDIC previously 

eliminated a similar requirement.76 To 

eliminate unnecessary recordkeeping 

complexity and provide parity with 

FDIC, the NCUA is proposing to 

eliminate current § 745.2(c)(3). 

Section 745.2(c)(4) states that the 

interests of the co-owners of a joint 

account shall be deemed equal, unless 

otherwise stated on the insured credit 

union’s records in the case of a tenancy 

in common. The NCUA is not proposing 

any substantive amendments to this 

provision but is proposing to move it to 

§ 745.2(c)(3) given the proposed 

elimination of the current requirement 

in that section. 

Finally, § 745.14(a)(2) notes that 

interest on lawyers’ trust accounts 

(IOLTAs) and other similar escrow 

accounts are subject to the 

recordkeeping requirements of 

§ 745.2(c)(1) and (2). In doing so, 

§ 745.14(a)(2) provides an example of 

how the details of the relationship 

between the attorney or escrow agent 

and their clients and principals must be 

ascertainable from the records of the 

FICU or from records maintained, in 

good faith and in the regular course of 

business, by the member attorney or 

member escrow agent administering the 

account. The NCUA proposes to amend 

this description to conform to the 

change to § 745.2(c)(2) to explicitly state 

that the records detailing the 

relationship and the interest of other 

parties in the account must be 

maintained, in good faith and in the 

regular course of business, by (1) the 

FICU or (2) the member attorney or 

member escrow agent, or a person or 

entity acting on their behalf. 

D. Request for Comment 

The NCUA is requesting comment on 

all aspects of the proposed rule. 

Comment is specifically invited with 

respect to the following questions: 

• Would the proposed amendments 

to the recordkeeping requirements in 

part 745 provide adequate clarity for 

FICUs, members, and other relevant 

third parties as to the records the NCUA 

will look to in evaluating the details of 

account relationships and the interests 

of other parties in accounts maintained 

at FICUs? 

• Are there any alternatives to the 

proposed rule that would better achieve 

the NCUA’s policy objectives in 

connection with this rulemaking? 

• Are there any other amendments to 

the recordkeeping requirements 

applicable to the share insurance rules 

that the NCUA should consider? For 

example, should the NCUA consider 

adopting a definition of ‘‘account 

records’’ similar to the definition the 

FDIC has provided for ‘‘deposit account 

records’’ in its regulations governing 

deposit insurance coverage? 77 Or, 

similarly, should the NCUA adopt 

specific provisions addressing multitiered fiduciary relationships like the 

FDIC has done? 78

• Relatedly, the FDIC has adopted 

regulations to facilitate prompt payment 

of FDIC-insured deposits when large 

IDIs fail.79 The FDIC’s recordkeeping for 

timely deposit insurance determination 

regulations require each IDI that has two 

million or more deposit accounts to (1) 


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80 12 U.S.C. 1821(f)(1); 12 U.S.C. 1823(c)(4). 81 12 U.S.C. 1787(d)(1). 82See 80 FR 57512 (Sept. 24, 2015). 83 44 U.S.C. 3507(d). 

configure its information technology 

system to be capable of calculating the 

insured and uninsured amount in each 

deposit account by ownership right and 

capacity, which would be used by the 

FDIC to make deposit insurance 

determinations in the event of the 

institution’s failure, and (2) maintain 

complete and accurate information 

needed by the FDIC to determine 

deposit insurance coverage with respect 

to each deposit account, except as 

otherwise provided. These requirements 

are intended to facilitate the FDIC’s 

prompt payment of deposit insurance 

after the failure of covered IDIs. By law, 

the FDIC must pay deposit insurance 

‘‘as soon as possible’’ after an IDI fails 

while also resolving the IDI in the 

manner least costly to the Deposit 

Insurance Fund.80 Similarly, the FCU 

Act requires the NCUA to pay 

accountholders ‘‘as soon as possible’’ 

after a FICU liquidation.81 Should the 

NCUA consider adopting similar 

requirements for FICUs? If so, would a 

lower threshold, such as 500,000 or 1 

million member accounts, be more 

appropriate? 

• If the NCUA opts to issue a final 

rule adopting the proposed change, is 

there any reason to delay its effective 

date, as contemplated for the proposed 

changes to trust accounts? Or should the 

NCUA make the change effective as 

soon as permitted by law? 

V. Regulatory Procedures 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires that, in connection 

with a notice of proposed rulemaking, 

an agency prepare and make available 

for public comment an initial regulatory 

flexibility analysis that describes the 

impact of a proposed rule on small 

entities. A regulatory flexibility analysis 

is not required, however, if the agency 

certifies that the rule will not have a 

significant economic impact on a 

substantial number of small entities 

(defined for the purposes of the RFA to 

include credit unions with assets less 

than $100 million) 82 and publishes its 

certification and a short, explanatory 

statement in the Federal Register 

together with the rule. 

The NCUA fully considered the 

potential economic impact of the 

proposed changes during the 

development of the proposed rule. As 

noted in the preamble, the proposed 

rule would simplify the NCUA’s current 

share insurance regulations covering 

various types of trust accounts. It would 

also provide more flexibility on the 

coverage of MSAs. Finally, it would 

explicitly provide for additional 

flexibility in what records the NCUA 

can look to when determining the 

details of account relationships and 

various parties’ interests in the 

accounts. 

In short, the NCUA believes the 

principal impact of the proposed rule 

will be to streamline its administrative 

procedures for insurance payouts on 

trust accounts when FICUs fail. While 

the proposed rule would require FICUs 

and their members to be familiar with 

the new trust rules and the coverage 

limits imposed on trust accounts, the 

NCUA believes this will not impose any 

new significant burden on FICUs, may 

ease some existing requirements, and 

should reduce the complexity of 

questions FICUs receive from their 

members on share insurance coverage. 

Additionally, FICUs and their members 

are familiar with the proposed formula 

as it is already applied to revocable trust 

accounts with five or fewer 

beneficiaries. The formula is also 

simpler to understand and implement 

than the previous rules governing 

revocable trust accounts with six or 

more beneficiaries and irrevocable 

trusts. The proposed changes to the rule 

governing coverage of MSAs and the 

changes to the recordkeeping 

requirements should only provide 

greater flexibility for coverage of these 

accounts and should not cause any new 

burden on FICUs or their members. 

Accordingly, the NCUA certifies that it 

would not have a significant economic 

impact on a substantial number of small 

FICUs. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA) applies to rulemakings in which 

an agency by rule creates a new 

paperwork burden on regulated entities 

or modifies an existing burden.83 For 

the purposes of the PRA, a paperwork 

burden may take the form of a reporting, 

disclosure, or recordkeeping 

requirement, each referred to as an 

information collection. The NCUA may 

not conduct or sponsor, and the 

respondent is not required to respond 

to, an information collection unless it 

displays a currently valid Office of 

Management and Budget (OMB) control 

number. 

The proposed rule does not contain 

information collection requirements that 

require approval by OMB under the 

PRA. The proposed rule will not create 

new or modify any existing paperwork 

burdens. Rather, the proposed rule will 

simplify the share insurance regulations 

by merging the revocable and 

irrevocable trust account categories into 

one trust account category and applying 

a simpler, common calculation method 

to determine insurance coverage for 

funds held in revocable and irrevocable 

trust accounts. The proposed rule will 

also provide consistent share insurance 

treatment for all MSA balances held to 

satisfy principal and interest obligations 

to a lender, regardless of whether those 

funds are paid into the account by 

borrowers or paid into the account by 

another party (such as the servicer) to 

satisfy a periodic obligation to remit 

principal and interest due to the lender. 

Finally, the proposed rule will also 

explicitly allow the NCUA, when 

making share insurance determinations, 

to look to records held in the normal 

course of business that are maintained 

by parties other than a FICU and its 

members on their behalf. As such, no 

PRA submissions to OMB will be made 

with respect to this proposed rule. The 

NCUA invites comments on its PRA 

determination. 

C. Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their actions on 

state and local interests. The NCUA, an 

independent regulatory agency as 

defined in 44 U.S.C. 3502(5), voluntarily 

complies with the principles of the 

executive order to adhere to 

fundamental federalism principles. This 

proposed rule would only impact the 

NCUA’s regulations related to share 

insurance coverage; it would not affect 

state law related to trust accounts. The 

proposed rule would also not alter the 

NCUA’s relationship or division of 

responsibilities with state regulatory 

agencies or bodies because the proposed 

rule would affect the NCUA’s Federal 

share insurance determinations 

exclusively. This proposal would not 

have a substantial direct effect on the 

states, on the connection between the 

national government and the states, or 

on the distribution of power and 

responsibilities among the various 

levels of government. The NCUA has 

determined that this proposal does not 

constitute a policy that has federalism 

implications for the purposes of the 

executive order. 

D. Assessment of Federal Regulations 

and Policies on Families 

The NCUA has determined that this 

proposed rule will not affect family 

well-being within the meaning of 

section 654 of the Treasury and General 

Government Appropriations Act, 1999, 

Public Law 105–277, 112 Stat. 2681 


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(1998). Under this statute, if the agency 

determines the proposed regulation may 

negatively affect family well-being, then 

the agency must provide an adequate 

rationale for its implementation. 

The NCUA has determined that the 

implementation of this proposed rule 

would not negatively affect family wellbeing, but rather would strengthen it. 

The NCUA believes that any effect 

would be limited because the change 

may not affect many accounts, and 

members or others maintaining those 

accounts would have time and notice to 

modify the accounts before the NCUA 

adopts and implements any final rule on 

this subject. Overall, the NCUA believes 

that the proposed rule would not 

negatively affect family well-being 

despite this possible effect but 

welcomes public comment on this issue. 

If the NCUA ultimately finds that the 

rule would have a negative effect as the 

statute describes, it believes the benefits 

that the preamble describes in 

simplifying coverage and potentially 

reducing costs for the NCUA and for 

FICUs would support implementing the 

rule. 

E. Providing Accountability Through 

Transparency Act of 2023 

The Providing Accountability 

Through Transparency Act of 2023 (5 

U.S.C. 553(b)(4)) (Act) requires that a 

notice of proposed rulemaking include 

the internet address of a summary of not 

more than 100 words in length of a 

proposed rule, in plain language, that 

shall be posted on the internet website 

under section 206(d) of the EGovernment Act of 2002 (44 U.S.C. 3501 

note) (commonly known as 

regulations.gov). 

In summary, the proposed rule would 

simplify the share insurance regulations 

by establishing a ‘‘trust accounts’’ 

category that would provide for 

coverage of funds of both revocable 

trusts and irrevocable trusts deposited at 

FICUs, provide consistent share 

insurance treatment for all mortgage 

servicing account balances held to 

satisfy principal and interest obligations 

to a lender, and provide more flexibility 

for the NCUA to consider various 

records in determining share insurance 

coverage in liquidations. 

The proposal and the required 

summary can be found at https://

www.regulations.gov. 

List of Subjects in 12 CFR Part 745 

Credit, Credit Unions, Share 

Insurance. 

By the National Credit Union 

Administration Board on October 19, 2023. 

Melane Conyers-Ausbrooks, 

Secretary of the Board. 

For the reasons discussed in the 

preamble, the Board proposes to amend 

12 CFR part 745 as follows: 

PART 745—SHARE INSURANCE 

COVERAGE 

■ 1. The authority citation for part 745 

continues to read as follows: 

Authority: 12 U.S.C. 1752(5), 1757, 1765, 

1766, 1781, 1782, 1787, 1789; title V, Pub. L. 

109–351;120 Stat. 1966. 

■ 2. The heading for part 745 is revised 

to read as set forth above. 

§ 745.0 [Amended] 

■ 3. Amend § 745.0 by removing the 

words ‘‘and appendix’’. 

■ 4. Revise § 745.1 to read as follows: 

§ 745.1 Definitions. 

For the purposes of this part: 

Account or accounts mean share, 

share certificate, or share draft accounts 

(or their equivalent under state law, as 

determined by the Board in the case of 

insured state-chartered credit unions) of 

a member (which includes other credit 

unions, public units, and nonmembers 

where permitted under the Act) in a 

credit union of a type approved by the 

Board which evidences money or its 

equivalent received or held by a credit 

union in the usual course of business 

and for which it has given or is 

obligated to give credit to the account of 

the member. 

Member or members mean those 

persons enumerated in the credit 

union’s field of membership who have 

been elected to membership in 

accordance with the Act or state law in 

the case of state-chartered credit unions. 

It also includes those nonmembers 

permitted under the Act to maintain 

accounts in an insured credit union, 

including nonmember credit unions and 

nonmember public units and political 

subdivisions. 

Non-contingent interest means an 

interest capable of determination 

without evaluation of contingencies 

except for those covered by the present 

worth tables and rules of calculation for 

their use set forth in § 20.2031–7 of the 

Federal Estate Tax Regulations (26 CFR 

20.2031–7) or any similar present worth 

or life expectancy tables which may be 

adopted by the Internal Revenue 

Service. 

Political subdivision includes any 

subdivision of a public unit, as defined 

in paragraph (c) of this section, or any 

principal department of such public 

unit, 

(1) The creation of which subdivision 

or department has been expressly 

authorized by state statute; 

(2) To which some functions of 

government have been delegated by 

state statute; and 

(3) To which funds have been 

allocated by statute or ordinance for its 

exclusive use and control. It also 

includes drainage, irrigation, navigation 

improvement, levee, sanitary, school or 

power districts and bridge or port 

authorities, and other special districts 

created by state statute or compacts 

between the states. Excluded from the 

term are subordinate or nonautonomous 

divisions, agencies, or boards within 

principal departments. 

Public unit means the United States, 

any state of the United States, the 

District of Columbia, the 

Commonwealth of Puerto Rico, the 

Panama Canal Zone, any territory or 

possession of the United States, any 

county, municipality, or political 

subdivision thereof, or any Indian tribe 

as defined in section 3(c) of the Indian 

Financing Act of 1974. 

Standard maximum share insurance 

amount referred to as the ‘‘SMSIA’’ 

hereafter, means $250,000 adjusted 

pursuant to subparagraph (F) of section 

11(a)(1) of the Federal Deposit Insurance 

Act (12 U.S.C. 1821(a)(1)(F)). 

■ 5. Amend § 745.2 by: 

■ a. Revising paragraph (a); 

■ b. Revising paragraph (c)(2); 

■ c. Removing paragraph (c)(3); 

■ d. Redesignating paragraph (c)(4) as 

paragraph (c)(3); 

■ e. Removing paragraph (d); and 

■ f. Redesignating paragraphs (e) and (f) 

as paragraphs (d) and (e). 

The revisions read as follows: 

§ 745.2 General principles applicable in 

determining insurance of accounts. 

(a) General. This part provides for 

determination by the Board of the 

amount of members’ insured accounts. 

The rules for determining the insurance 

coverage of accounts maintained by 

members in the same or different rights 

and capacities in the same insured 

credit union are set forth in the 

following provisions of this part. While 

the provisions of this part govern in 

determining share insurance coverage, 

to the extent local law enters into a 

share insurance determination, the local 

law of the jurisdiction in which the 

insured credit union’s principal office is 

located will control over the local law 

of other jurisdictions where the insured 

credit union has offices or service 

facilities. 

* * * * * 

(c) * * * 

(2) If the account records of an 

insured credit union disclose the 


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existence of a relationship which may 

provide a basis for additional insurance, 

the details of the relationship and the 

interest of other parties in the account 

must be ascertainable either from the 

records of the credit union or the 

records of the member, maintained in 

good faith and in the regular course of 

business by the member or by some 

person or entity that has undertaken to 

maintain such records for the member. 

* * * * * 

■ 6. Amend § 745.3 by revising 

paragraph (a)(3) to read as follows: 

§ 745.3 Single ownership accounts. 

(a) * * * 

(3) Mortgage servicing accounts. 

Accounts maintained by a mortgage 

servicer, in a custodial or other 

fiduciary capacity, which are comprised 

of payments of principal and interest, 

shall be insured for the cumulative 

balance paid into the account by 

mortgagors, or in order to satisfy 

mortgagors’ principal or interest 

obligations to the lender, up to the limit 

of the SMSIA per mortgagor. Accounts 

maintained by a mortgage servicer, in a 

custodial or other fiduciary capacity, 

which are comprised of payments by 

mortgagors of taxes and insurance 

premiums shall be added together and 

insured in accordance with paragraph 

(a)(2) of this section for the ownership 

interest of each mortgagor in such 

accounts. 

* * * * * 

■ 7. Revise § 745.4 to read as follows: 

§ 745.4 Trust accounts. 

(a) Scope and definitions. This section 

governs coverage for funds held in 

connection with informal revocable 

trusts, formal revocable trusts, and 

irrevocable trusts. For the purposes of 

this section: 

(1) Informal revocable trust means a 

trust under which deposited funds pass 

directly to one or more beneficiaries 

upon the owner’s death without a 

written trust agreement, commonly 

referred to as a payable-on-death 

account, in-trust-for account, or Totten 

trust account. 

(2) Formal revocable trust means a 

revocable trust established by a written 

trust agreement under which deposited 

funds pass to one or more beneficiaries 

upon the grantor’s death. 

(3) Irrevocable trust means an 

irrevocable trust established by statute 

or a written trust agreement, except as 

described in paragraph (e) of this 

section. 

(b) Calculation of coverage—(1) 

General calculation. Deposited trust 

funds are insured in an amount up to 

the SMSIA multiplied by the total 

number of beneficiaries identified by 

each grantor, up to a maximum of five 

beneficiaries. 

(2) Aggregation for purposes of 

insurance limit. Deposited trust funds 

that pass from the same grantor to 

beneficiaries are aggregated for the 

purposes of determining coverage under 

this section, regardless of whether those 

funds are held in connection with an 

informal revocable trust, formal 

revocable trust, or irrevocable trust. 

(3) Separate insurance coverage. The 

share insurance coverage provided 

under this section is separate from 

coverage provided for other funds at the 

same federally insured credit union. 

(4) Equal allocation presumed. Unless 

otherwise specified in the account 

records of the federally insured credit 

union, deposited funds held in 

connection with a trust established by 

multiple grantors are presumed to have 

been owned or funded by the grantors 

in equal shares. 

(c) Number of beneficiaries. The total 

number of beneficiaries for trust funds 

deposited under paragraph (b) of this 

section will be determined as follows: 

(1) Eligible beneficiaries. Subject to 

paragraph (c)(2) of this section, 

beneficiaries include natural persons, as 

well as charitable organizations and 

other non-profit entities recognized as 

such under the Internal Revenue Code 

of 1986, as amended. 

(2) Ineligible beneficiaries. 

Beneficiaries do not include: 

(i) The grantor of a trust; or 

(ii) A person or entity that would only 

obtain an interest in the deposited funds 

if one or more named beneficiaries are 

deceased. 

(3) Future trust(s) named as 

beneficiaries. If a trust agreement 

provides that trust funds will pass into 

one or more new trusts upon the death 

of the grantor(s) (‘‘future trusts’’), the 

future trust(s) are not treated as 

beneficiaries of the trust; rather, the 

future trust(s) are viewed as 

mechanisms for distributing trust funds, 

and the beneficiaries are the natural 

persons or organizations that shall 

receive the trust funds through the 

future trusts. 

(4) Informal trust account payable to 

member’s formal trust. If an informal 

revocable trust designates the account 

owner’s formal trust as its beneficiary, 

the informal revocable trust account 

will be treated as if titled in the name 

of the formal trust. 

(d) Account records— (1) Informal 

revocable trusts. The beneficiaries of an 

informal revocable trust must be 

specifically named in the account 

records of the federally insured credit 

union. 

(2) Formal revocable trusts. The title 

of a formal trust account must include 

terminology sufficient to identify the 

account as a trust account, such as 

‘‘family trust’’ or ‘‘living trust,’’ or must 

otherwise be identified as a 

testamentary trust in the account 

records of the federally insured credit 

union. If eligible beneficiaries of such 

formal revocable trust are specifically 

named in the account records of the 

federally insured credit union, the 

NCUA shall presume the continued 

validity of the named beneficiaries’ 

interest in the trust. 

(e) Deposited funds excluded from 

coverage under this section—(1) 

Revocable trust co-owners that are sole 

beneficiaries of a trust. If the co-owners 

of an informal or formal revocable trust 

are the trust’s sole beneficiaries, 

deposited funds held in connection 

with the trust are treated as joint 

ownership funds under § 745.8. 

(2) Employee benefit plan deposits. 

Deposited funds of employee benefit 

plans, even if held in connection with 

a trust, are treated as employee benefit 

plan funds under § 745.9. 

§ 745.9–1 [Removed] 

■ 8. Remove § 745.9–1. 

§ 745.9–2 [Redesignated as § 745.9 and 

Amended] 

■ 9. Redesignate § 745.9–2 as § 745.9 

and remove the words ‘‘, in accordance 

with § 745.2 of this part’’ in newly 

redesignated paragraph (a). 

§ 745.13 [Amended] 

■ 10. Amend § 745.13 by removing the 

words ‘‘the appendix’’. 

■ 11. Amend § 745.14 by revising 

paragraph (a)(2) to read as follows: 

§ 745.14 Interest on lawyers trust accounts 

and other similar escrow accounts. 

(a) * * * 

(2) Pass-through coverage will only be 

available if the recordkeeping 

requirements of § 745.2(c)(1) of this part 

and the relationship disclosure 

requirements of § 745.2(c)(2) of this part 

are satisfied. In the event those 

requirements are satisfied, funds 

attributable to each client and principal 

will be insured on a pass-through basis 

in whatever right and capacity the client 

or principal owns the funds. For 

example, an IOLTA or other similar 

escrow account must be titled as such, 

and the underlying account records of 

the insured credit union must 

sufficiently indicate the existence of the 

relationship on which a claim for 

insurance is founded. The details of the 

relationship between the attorney or 

escrow agent and their clients and 

principals must be ascertainable from 


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the records of the insured credit union 

or from records maintained, in good 

faith and in the regular course of 

business, by the attorney or the escrow 

agent administering the account, or by 

some person or entity that has 

undertaken to maintain such records for 

the attorney or escrow agent. The NCUA 

will determine, in its sole discretion, the 

sufficiency of these records for an 

IOLTA or other similar escrow account. 

* * * * * 

Appendix to Part 745 [Removed] 

■ 12. Remove Appendix to Part 745. 

[FR Doc. 2023–23481 Filed 10–24–23; 8:45 am] 

BILLING CODE 7535–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2023–2001; Project 

Identifier MCAI–2023–00666–T] 

RIN 2120–AA64 

Airworthiness Directives; Bombardier, 

Inc., Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: The FAA proposes to 

supersede Airworthiness Directive (AD) 

2021–20–13, which applies to certain 

Bombardier, Inc., Model CL–600–2B16 

(604 Variant) airplanes. AD 2021–20–13 

requires repetitive lubrication and 

repetitive detailed visual inspections 

(DVI) and non-destructive test (NDT) 

inspections of the main landing gear 

(MLG) shock strut lower pins, and 

replacement if necessary. Since the FAA 

issued AD 2021–20–13, Bombardier, 

Inc. developed a new design solution for 

this potential failure. This proposed AD 

would continue to require the 

lubrication and inspections specified in 

AD 2021–20–13 until the MLG shock 

strut assembly is modified by replacing 

the trailing arm bushing and installing 

new dynamic joint components. The 

FAA is proposing this AD to address the 

unsafe condition on these products. 

DATES: The FAA must receive comments 

on this proposed AD by December 11, 

2023. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, by any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

regulations.gov. Follow the instructions 

for submitting comments. 

• Fax: 202–493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

AD Docket: You may examine the AD 

docket at regulations.gov under Docket 

No. FAA–2023–2001; or in person at 

Docket Operations between 9 a.m. and 

5 p.m., Monday through Friday, except 

Federal holidays. The AD docket 

contains this NPRM, the mandatory 

continuing airworthiness information 

(MCAI), any comments received, and 

other information. The street address for 

Docket Operations is listed above. 

Material Incorporated by Reference: 

• For service information identified 

in this NPRM, contact Bombardier, Inc., 

200 Coˆte-Vertu Road West, Dorval, 

Que ́bec H4S 2A3, Canada; North 

America toll-free telephone 1–866–538– 

1247 or direct-dial telephone 1–514– 

855–2999; email ac.yul@

aero.bombardier.com; website 

bombardier.com. 

• You may view this service 

information at the FAA, Airworthiness 

Products Section, Operational Safety 

Branch, 2200 South 216th Street, Des 

Moines, WA. For information on the 

availability of this material at the FAA, 

call 206–231–3195. 

FOR FURTHER INFORMATION CONTACT: 

Gabriel Kim, Aviation Safety Engineer, 

FAA, 1600 Stewart Avenue, Suite 410, 

Westbury, NY 11590; telephone 516– 

228–7300; email 9-avs-nyaco-cos@

faa.gov. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

The FAA invites you to send any 

written relevant data, views, or 

arguments about this proposal. Send 

your comments to an address listed 

under ADDRESSES. Include ‘‘Docket No. 

FAA–2023–2001; Project Identifier 

MCAI–2023–00666–T’’ at the beginning 

of your comments. The most helpful 

comments reference a specific portion of 

the proposal, explain the reason for any 

recommended change, and include 

supporting data. The FAA will consider 

all comments received by the closing 

date and may amend the proposal 

because of those comments. 

Except for Confidential Business 

Information (CBI) as described in the 

following paragraph, and other 

information as described in 14 CFR 

11.35, the FAA will post all comments 

received, without change, to 

regulations.gov, including any personal 

information you provide. The agency 

will also post a report summarizing each 

substantive verbal contact received 

about this NPRM. 

Confidential Business Information 

CBI is commercial or financial 

information that is both customarily and 

actually treated as private by its owner. 

Under the Freedom of Information Act 

(FOIA) (5 U.S.C. 552), CBI is exempt 

from public disclosure. If your 

comments responsive to this NPRM 

contain commercial or financial 

information that is customarily treated 

as private, that you actually treat as 

private, and that is relevant or 

responsive to this NPRM, it is important 

that you clearly designate the submitted 

comments as CBI. Please mark each 

page of your submission containing CBI 

as ‘‘PROPIN.’’ The FAA will treat such 

marked submissions as confidential 

under the FOIA, and they will not be 

placed in the public docket of this 

NPRM. Submissions containing CBI 

should be sent to Gabriel Kim, Aviation 

Safety Engineer, FAA, 1600 Stewart 

Avenue, Suite 410, Westbury, NY 

11590; telephone 516–228–7300; email 

9-avs-nyaco-cos@faa.gov. Any 

commentary that the FAA receives 

which is not specifically designated as 

CBI will be placed in the public docket 

for this rulemaking. 

Background 

The FAA issued AD 2021–20–13, 

Amendment 39–21751 (86 FR 57033, 

October 14, 2021) (AD 2021–20–13), for 

certain Bombardier, Inc., CL–600–2B16 

(604 Variant) airplanes. AD 2021–20–13 

was prompted by an MCAI originated by 

Transport Canada, which is the aviation 

authority for Canada. Transport Canada 

issued AD CF–2020–54R1, dated 

December 23, 2020 (Transport Canada 

AD CF–2020–54R1), to correct an unsafe 

condition identified as cracking of the 

MLG shock strut lower pin part number 

19146–3. Transport Canada AD CF– 

2020–54R1 states that friction torque, 

when the shock strut is under 

compression loading, causes the pin 

anti-rotation tangs to become loaded 

beyond their load carrying capability. 

According to Transport Canada, this 

overload condition can result in pin 

fracture originating at the base of the pin 

anti-rotation tang and is aggravated by 

inadequate lubrication. 

AD 2021–20–13 requires repetitively 

lubricating, repetitively inspecting (DVI 

and NDT inspections for cracking and 

damage, including fracture of the MLG 

shock strut lower pin at the pin rotation 

tang location), and replacing the MLG 

shock strut lower pin if there is any 


lotter on DSK11XQN23PROD with PROPOSALS1