60616 Federal Register / Vol. 73, No. 199 / Tuesday, October 14, 2008 / Rules and Regulations 

security-related aspects. Incorporating 

the above attributes may promote more 

efficient and effective design reviews. 

However, the listing of a particular 

attribute does not necessarily mean that 

specific licensing criteria will attach to 

that attribute. Designs with some or all 

of these attributes are also likely to be 

more readily understood by the general 

public. Indeed, the number and nature 

of the regulatory requirements may 

depend on the extent to which an 

individual advanced reactor design 

incorporates general attributes such as 

those listed previously. 

In addition, the Commission expects 

that the safety features of these 

advanced reactor designs will be 

complemented by the operational 

program for Emergency Planning (EP). 

This EP operational program, in turn, 

must be demonstrated by inspections, 

tests, analyses, and acceptance criteria 

to ensure effective implementation of 

established measures. The Commission 

also expects that advanced reactor 

designs will comply with the 

Commission’s safety goal policy 

statement (51 FR 28044; August 4, 1986, 

as corrected and republished at 51 FR 

30028; August 21, 1986), and the policy 

statement on conversion to the metric 

measurement system (61 FR 31169; June 

19, 1996). 

To provide for more timely and 

effective regulation of advanced 

reactors, the Commission encourages 

the earliest possible interaction of 

applicants, vendors, other government 

agencies, and the NRC to provide for 

early identification of regulatory 

requirements for advanced reactors and 

to provide all interested parties, 

including the public, with a timely, 

independent assessment of the safety 

and security characteristics of advanced 

reactor designs. Such licensing 

interaction and guidance early in the 

design process will contribute towards 

minimizing complexity and adding 

stability and predictability in the 

licensing and regulation of advanced 

reactors. 

While the NRC does not develop new 

reactor designs, the Commission intends 

to develop the capability, when 

appropriate, for timely assessment and 

response to innovative and advanced 

reactor designs that might be presented 

for NRC review. Prior experience has 

shown that new reactor designs—even 

variations of established designs—may 

involve technical problems that must be 

solved to ensure adequate protection of 

the public health and safety. The earlier 

these design problems are identified, the 

earlier satisfactory resolution can be 

achieved. Prospective applicants are 

reminded that, while the NRC will 

undertake to review and comment on 

new design concepts, the applicants are 

responsible for documentation and 

research necessary to support a specific 

application. Research activities would 

include testing of new safety or security 

features that differ from existing designs 

for operating reactors, or that use 

simplified, inherent, passive means to 

accomplish their safety or security 

function. The testing shall ensure that 

these new features will perform as 

predicted, will provide for the 

collection of sufficient data to validate 

computer codes, and will show that the 

effects of system interactions are 

acceptable. 

During the initial phase of advanced 

reactor development, the Commission 

particularly encourages design 

innovations that enhance safety, 

reliability, and security (such as those 

described previously) and that generally 

depend on technology that is either 

proven or can be demonstrated by a 

straightforward technology development 

program. In the absence of a significant 

history of operating experience on an 

advanced concept reactor, plans for the 

innovative use of proven technology 

and/or new technology development 

programs should be presented to the 

NRC for review as early as possible, so 

that the NRC can assess how the 

proposed program might influence 

regulatory requirements. 

Finally, the NRC also believes that it 

will be in the interest of the public as 

well as the design vendors and the 

prospective license applicants to 

address security issues early in the 

design stage to achieve a more robust 

and effective security posture for future 

nuclear power reactors. 

Dated at Rockville, Maryland, this 7th day 

of October 2008. 

For the Nuclear Regulatory Commission. 

Annette L. Vietti-Cook, 

Secretary of the Commission. 

[FR Doc. E8–24268 Filed 10–10–08; 8:45 am] 

BILLING CODE 7590–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 745 

RIN 3133–AD54 

Share Insurance for Revocable Trust 

Accounts 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: NCUA is amending its share 

insurance rules to simplify coverage for 

revocable trust accounts. The 

amendments will make the rules easier 

to understand and apply without 

decreasing coverage, result in faster 

share insurance determinations in the 

event of a credit union closing, and help 

improve public confidence in the credit 

union system. The amendments 

eliminate the concept of ‘‘qualifying 

beneficiaries.’’ Also, for members with 

revocable trust accounts totaling no 

more than $500,000, coverage will be 

determined without regard to the 

proportional beneficial interest of each 

beneficiary in the trust. 

Under the amended rules, a trust 

account owner with up to five different 

beneficiaries named in all of his or her 

revocable trust accounts at one NCUAinsured institution will be insured up to 

$100,000 per beneficiary. Revocable 

trust account owners with more than 

$500,000 and more than five different 

beneficiaries named in the trust(s) will 

be insured for the greater of either: 

$500,000 or the aggregate amount of all 

the beneficiaries’ interests in the 

trust(s), limited to $100,000 per 

beneficiary. 

DATES: This rule is effective on October 

14, 2008. Written comments must be 

received on or before December 15, 

2008. 

ADDRESSES: You may submit comments 

by any of the following methods (Please 

send comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web Site: http:// 

www.ncua.gov/ 

RegulationsOpinionsLaws/ 

proposed_regs/proposed_regs.html. 

Follow the instructions for submitting 

comments. 

• E-mail: Address to 

regcomments@ncua.gov. Include ‘‘[Your 

name] Comments on Share Insurance for 

Revocable Trust Accounts’’ in the e-mail 

subject line. 

• Fax: (703) 518–6319. Use the 

subject line described above for e-mail. 

• Mail: Address to Mary Rupp, 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314– 

3428. 

• Hand Delivery/Courier: Same as 

mail address. 

Public Inspection: All public 

comments are available on the agency’s 

Web site at http://www.ncua.gov/ 

RegulationsOpinionsLaws/comments as 

submitted, except as may not be 

possible for technical reasons. Public 

comments will not be edited to remove 


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Federal Register / Vol. 73, No. 199 / Tuesday, October 14, 2008 / Rules and Regulations 60617 

1Because of the complexities of living trusts, 

NCUA’s insurance determinations on those 

accounts could be time consuming and delay 

members receiving their insured account proceeds. 

any identifying or contact information. 

Paper copies of comments may be 

inspected in NCUA’s law library at 1775 

Duke Street, Alexandria, Virginia 22314, 

by appointment weekdays between 

9 a.m. and 3 p.m. To make an 

appointment, call (703) 518–6546 or 

send an e-mail to OGCMail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Frank Kressman, Staff Attorney, at the 

above address, or telephone: (703) 518– 

6540. 

SUPPLEMENTARY INFORMATION: 

I. 

A. Background 

NCUA insures member share accounts 

in all federally-chartered credit unions 

and the vast majority of state-chartered 

credit unions. This accounts for 

approximately 98% of all credit unions 

in the United States. Despite NCUA’s 

best efforts to provide clear information 

on insurance coverage for revocable 

trust accounts and recent rule changes 

to simplify that determination, NCUA 

recognizes there is still significant 

public and industry confusion about the 

insurance coverage of revocable trust 

accounts. See NCUA Web site at 

http://www.ncua.gov/ShareInsurance/ 

index.htm; 68 FR 75111 (December 30, 

2003); 69 FR 8798 (February 26, 2004). 

This is evidenced by the great volume 

of share insurance inquiries NCUA has 

received as a result of recent events in 

the financial markets and is particularly 

true of living trust accounts, one of the 

two types of revocable trust accounts 

NCUA insures. This is largely due to the 

increasingly complex nature of living 

trusts.1 NCUA believes the amendments 

in this interim rule will further clarify 

how revocable trust accounts are 

covered, enhance NCUA’s ability to 

help maintain public confidence and 

stability in the credit union system, and 

protect insured members. 

B. Current Share Insurance Rules for 

Revocable Trust Accounts 

NCUA insures informal and formal 

revocable trust accounts under its share 

insurance rules. 12 CFR Part 745. 

Informal trust accounts are comprised 

simply of a signature card on which the 

member designates the beneficiaries to 

whom the funds in the account will 

pass upon the member’s death. These 

are the most common type of revocable 

trust accounts and generally are referred 

to as ‘‘payable-on-death’’ (POD) 

accounts or in-trust-for (ITF) accounts or 

Totten Trust accounts. Throughout this 

preamble, NCUA will refer to all 

informal trust accounts as POD 

accounts. Formal revocable trust 

accounts are established in connection 

with a formal written revocable trust 

document. They are increasingly 

popular trusts created for estate 

planning purposes and are often 

referred to as: Living trusts, family 

trusts, marital trusts, survivor’s trusts, 

by-pass trusts, generation-skipping 

trusts, AB trusts or special needs trusts. 

Throughout this preamble, NCUA will 

refer to all formal revocable trusts as 

living trusts. Like an informal revocable 

trust, a living trust is created by a 

member, also known as a grantor or 

settlor, over which the member as 

owner retains control during his or her 

lifetime. Upon the owner’s death, the 

trust generally becomes irrevocable. 

NCUA insures POD and living trust 

accounts under § 745.4 of its share 

insurance rules. 12 CFR 745.4. 

NCUA’s rules provide that all 

revocable trust accounts (both POD 

accounts and living trust accounts) are 

insured up to $100,000 per ‘‘qualifying 

beneficiary’’ designated by the owner of 

the account. Id. If there are multiple 

owners of a revocable trust account, 

coverage is available separately for each 

owner, per qualifying beneficiary as to 

each owner. Qualifying beneficiaries are 

defined as the owner’s spouse, children, 

grandchildren, parents and siblings. 12 

CFR 745.4(b). 

The per-qualifying beneficiary 

coverage available on revocable trust 

accounts is separate from the insurance 

coverage afforded to members in 

connection with other accounts they 

own in other ownership capacities at 

the same NCUA-insured credit union. 

For example, if a member has a singleownership account with a balance of 

$100,000 and a POD account (naming at 

least one qualifying beneficiary) with a 

balance of $100,000 at the same NCUAinsured credit union, both accounts 

would be insured separately for a 

combined coverage amount of $200,000. 

Under our current rules, separate, perbeneficiary insurance coverage is 

available for revocable trust accounts 

only if the account satisfies certain 

requirements including: (1) The account 

must evidence the owner’s intent that 

the funds shall belong to the designated 

beneficiaries upon the owner’s death; 

(2) each beneficiary must be a qualifying 

beneficiary; and (3) for POD accounts, 

the beneficiaries must be specifically 

named in the account records of the 

credit union. Under the current rules, 

the beneficiaries of a living trust need 

not be indicated in the credit union’s 

records. 12 CFR 745.4(e). 

If a revocable trust account owner 

names one or more non-qualifying 

beneficiaries in the account or trust, the 

funds corresponding to those nonqualifying beneficiaries are considered 

the single-ownership funds of the owner 

and insured under that category of 

coverage. For example, assume a 

member owns a POD account (and no 

other accounts at the same credit union) 

that names his spouse and a friend as 

beneficiaries. The account has a balance 

of $200,000. The coverage would be 

$100,000 under the revocable trust 

coverage rules because he has named 

one qualifying beneficiary, and 

$100,000 would be insured under the 

single-ownership coverage rules because 

the funds attributable to the nonqualifying beneficiary (the friend) 

would be considered the owner’s singleownership funds and thus insured 

under that category of ownership. If the 

account owner in this example also had 

a single-ownership account with a 

balance of $50,000, then the $100,000 

(attributable to the non-qualifying 

beneficiary) from his POD account 

would be added to the $50,000 held in 

the single-ownership account and 

insured to a limit of $100,000. Thus, 

$50,000 would be uninsured. 

As discussed above, both POD 

accounts and living trust accounts are 

types of revocable trust accounts 

insured under the revocable trust 

account category in NCUA’s share 

insurance rules. Consequently, all funds 

that a member holds in living trust 

accounts and POD accounts naming the 

same beneficiaries are aggregated for 

insurance purposes and insured to the 

applicable coverage limits. For example, 

if a member has a living trust account 

for $200,000 naming his children, A and 

B, and also has a $200,000 POD account 

naming A and B, the combined coverage 

on the two aggregated accounts would 

be $200,000 in total, not $200,000 per 

account. 

II. The Interim Rule 

A. Overview 

In this rulemaking, NCUA seeks to 

make the insurance coverage rules for 

revocable trust accounts easy to 

understand and apply, without 

decreasing coverage currently available 

for revocable trust account owners, and 

retain reasonable limitations on 

coverage levels for revocable trust 

account owners. Under the interim rule, 

a trust account owner with up to 

$500,000 in revocable trust accounts at 

one NCUA-insured institution is 

insured up to $100,000 per beneficiary. 

NCUA believes this is the scenario that 

will apply to the vast majority of 


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2This assumes the account owner has no other 

revocable trust accounts at the same credit union. 

revocable trust account owners. 

Revocable trust account owners with 

more than $500,000 in those accounts 

and more than five different 

beneficiaries named in the trust(s) are 

insured differently. They will be 

insured for the greater of either: 

$500,000 or the aggregate amount of all 

the beneficiaries’ interests in the 

trust(s), limited to $100,000 per 

beneficiary. Under the interim final 

rule, coverage is based on the existence 

of any beneficiary named in the 

revocable trust, as long as the 

beneficiary is a natural person, or a 

charity or other non-profit organization. 

If in establishing a POD account, the 

owner names a living trust as the 

beneficiary, we will consider the 

beneficiaries of the trust to be the 

beneficiaries of the POD account. As 

discussed below, under the interim rule 

the concept of ‘‘qualifying beneficiaries’’ 

is eliminated. For an account owner 

with combined revocable trust account 

balances of $500,000 or less, the 

maximum available coverage would be 

determined simply by multiplying the 

number of beneficiaries by $100,000. 

A living trust account with a balance 

of $400,000, for example, would be 

insured for up to $400,000 as long as 

there are at least four beneficiaries 

named in the trust.2 Different 

proportional ownership interests of the 

beneficiaries in the trust assets would 

not affect the share insurance coverage. 

So, in this example, the maximum 

coverage would be $400,000 even if the 

trust provided that beneficiaries A and 

B are entitled to twenty percent each of 

the trust assets and beneficiaries C and 

D are entitled to thirty percent each of 

the trust assets. As under the current 

rules, however, a member would receive 

a combined maximum coverage amount 

of $100,000 for the same beneficiary 

named in more than one revocable trust 

account he or she owns at one credit 

union. For example, if a member has a 

POD account naming her son as a 

beneficiary and a living trust account at 

the same credit union naming the same 

son as a beneficiary, the member would 

be entitled to no more than $100,000 

with respect to having named her son a 

beneficiary of her revocable trust 

accounts. 

B. Eliminating the Concept of 

‘‘Qualifying Beneficiaries’’ 

As explained above, previous 

revocable trust account coverage was 

based, in large part, on the number of 

qualifying beneficiaries named in the 

trust(s). In the most recent revocable 

trust account rule amended by this 

interim final rule, qualifying 

beneficiaries were defined as the 

revocable trust account owner’s spouse, 

children, grandchildren, parents and 

siblings. 12 CFR 745.4(b). In previous 

versions of that rule, the definition 

included only the owner’s spouse, 

children and grandchildren. The 

rationale for expanding the definition of 

qualifying beneficiaries to include the 

account owner’s parents and siblings 

was to recognize other family members 

likely to be named in a person’s 

revocable trust(s). 

Before and since the expansion of the 

definition of qualifying beneficiaries, 

members and industry participants have 

questioned the fairness of limiting the 

coverage on revocable trust accounts to 

only certain beneficiaries. Many have 

stated the definition of qualifying 

beneficiaries should include, among 

others, an account holder’s nieces and 

nephews, in-laws, great-grandchildren, 

cousins, friends and charities. 

Historically, in response to these 

complaints, NCUA has taken the 

position that there must be a reasonable 

limitation of the amount of coverage 

available on revocable trust accounts, 

otherwise, there would be potentially 

unlimited coverage under this account 

category. Accordingly, NCUA has been 

reluctant to amend the rules to provide 

coverage for any beneficiary(ies) named 

in a revocable trust without limitation. 

Under the interim rule, however, the 

NCUA believes that it can achieve 

greater fairness under the revocable 

trust rules by basing coverage on the 

naming of any beneficiary in a revocable 

trust, but concurrently imposing the 

coverage qualifications discussed below 

on accounts over $500,000. 

In addition to addressing the fairness 

issue, eliminating the concept of 

‘‘qualifying beneficiaries’’ makes the 

coverage rules easier to understand. 

Members and credit unions no longer 

need to know who is a qualifying 

beneficiary and who is not. Also, this 

revision will obviate the need for NCUA 

claims agents, upon a credit union’s 

failure to confirm that a beneficiary 

named in a revocable trust account is a 

‘‘qualifying beneficiary.’’ Thus, under 

the interim rule, the NCUA anticipates 

being able to make quicker share 

insurance determinations on revocable 

trust accounts, if necessary. 

C. Accounts With Aggregate Balances of 

$500,000 or Less; Determining Coverage 

Without the Necessity of Discerning 

Each Beneficiary’s Interest in the 

Trust(s) 

Previously, one of the most complex 

and confusing aspects of determining 

revocable trust account coverage was 

having to discern and consider unequal 

beneficial interests in revocable trusts. 

This issue typically arises in the context 

of a living trust that, for example, 

provides either varying lump-sum 

payments for designated beneficiaries or 

different percentage interests in trust 

assets to certain beneficiaries, or 

different ‘‘remainder’’ interests in the 

assets to the same or other beneficiaries. 

The method for determining coverage in 

some situations involving unequal 

beneficial interests necessitates the 

formulation and solving of simultaneous 

equations. Credit unions and members 

alike find applying these equations far 

too complex. NCUA agrees. 

Accordingly, a key component of the 

interim rule is the ability to determine 

coverage available to account owners 

without regard to unequal interests of 

the beneficiaries named in the revocable 

trust(s). NCUA believes this rule change, 

coupled with the recognition of all 

beneficiaries, will make the revocable 

trust account rules simpler and more 

transparent. 

D. Retaining Current Coverage Levels for 

Revocable Trust Accounts With More 

Than $500,000 and More Than Five 

Beneficiaries Named in the Trust(s) 

NCUA believes the vast majority of 

revocable trust account owners have 

less than $500,000 in revocable trust 

accounts at one NCUA-insured 

institution. In this scenario, under the 

interim rule, coverage for an account 

owner’s revocable trust accounts will be 

determined simply by multiplying the 

number of different beneficiaries named 

in the trust(s) by $100,000. 

To set reasonable limits on the 

maximum coverage available to 

revocable trust account owners and also 

retain the coverage levels available to 

revocable trust account owners under 

previous rules, the interim rule provides 

special treatment for members with 

revocable trust accounts over $500,000 

naming more than five beneficiaries. 

Under the interim rule, revocable trust 

account owners with more than 

$500,000 and more than five 

beneficiaries named in the trusts are 

insured for the greater of either: 

$500,000 or the aggregate amount of all 

the beneficiaries’ interests in the 

trust(s), limited to $100,000 per 

beneficiary. This coverage is no less 

than the coverage afforded to such 

account owners under previous rules, 

particularly because under the interim 

rule the coverage is based on the 

number of beneficiaries, not the number 

of qualifying beneficiaries. Also, as 

discussed below, under the interim rule, 

life-estate interest holders are deemed to 


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Federal Register / Vol. 73, No. 199 / Tuesday, October 14, 2008 / Rules and Regulations 60619 

3For jointly-owned living trusts, upon the death 

of one of the owners, typically part of the trust 

remains revocable and part becomes irrevocable. 

4 12 CFR 745.9–1. 

5This assumes neither grantor has any other 

revocable trust accounts at the same insured 

institution. 

6Of course, NCUA’s rules provide for a six-month 

grace period after the death of a member during 

which the coverage would be the same as if the 

member (grantor) were still alive. 12 CFR 745.2(e). 

7 5 U.S.C. 553. 

have a $100,000 interest in the trust 

assets. 

For example, assume a member has a 

living trust account that provides a life 

estate interest for the member’s spouse, 

$15,000 for his college alma mater, 

$5,000 for each of three brothers and the 

remaining amount to his friend. The 

balance in the account is $600,000. The 

analysis begins with recognizing the 

account balance exceeds $500,000 and 

the number of beneficiaries exceeds 

five. Accordingly, under the interim 

rule, the maximum coverage would be 

the greater of either: $500,000 or the 

aggregate beneficial interests of all the 

beneficiaries (up to a limit of $100,000 

per beneficiary). The beneficial interests 

are: $100,000 for the spouse’s life estate 

interest, $15,000 for the college, $5,000 

for each brother (totaling $15,000), and 

$100,000 for the friend (because of the 

per-beneficiary limitation of $100,000). 

The total beneficial interests, therefore, 

are $230,000. Hence, the maximum 

coverage afforded to the account owner 

would be $500,000, the greater of 

$500,000 or $230,000. 

NCUA believes basing the coverage of 

trust accounts in excess of $500,000 

with more than five different 

beneficiaries, on the ownership interest 

of each beneficiary named in the 

applicable trust(s) would prevent the 

potential of having to provide unlimited 

coverage with respect to revocable trust 

accounts. Without such a limitation, a 

member could name a limitless number 

of beneficiaries each with a nominal 

interest in the trust and obtain coverage 

up to $100,000 for naming each such 

beneficiary. For example, a revocable 

trust account held in connection with a 

trust entitling one beneficiary to $1 

million and entitling each of nine other 

beneficiaries to $1 would be insured for 

$1 million, without the limitation 

discussed above being imposed as part 

of the interim rule. 

E. Treatment of Life-Estate Interests 

Another complicating factor in 

determining the coverage for living trust 

accounts is determining the value of life 

estate interests. A life estate interest 

usually means the life-estate beneficiary 

is entitled to the income on the trust 

assets during his or her lifetime. A large 

percentage of living trusts provide a life 

estate interest for one or more 

beneficiaries. The most typical situation 

is where a married person creates a trust 

providing a life estate interest for his or 

her surviving spouse and a remainder 

interest for their children. NCUA’s 

previous rules provide that, in such 

situations, each life-estate holder and 

each remainder-man (also known as 

residuary beneficiaries) is deemed to 

have an equal interest in the trust assets 

for account insurance purposes. 12 CFR 

745.4(e). This rule has proven difficult 

to apply, especially where the living 

trust provides for lump-sum gifts for 

certain beneficiaries, life estate interests 

for others and different percentage 

interests for the remainder-men, who 

may be the same as or different from the 

other beneficiaries. To simplify the 

coverage rules, the interim rule revises 

the previous valuation method for life 

estate interests by deeming each such 

interest to be $100,000, for purposes of 

determining deposit insurance coverage. 

The example above, involving a trust 

providing for a spousal life estate 

interest and bequests to the owner’s 

college alma mater, brothers and friend, 

demonstrates how the interim rule 

would apply to a living trust providing 

for a life-estate interest. 

F. Treatment of Irrevocable Trusts 

Springing From a Revocable Trust 

Another complexity in determining 

coverage for living trust accounts is that, 

when it is created, a living trust is a 

revocable trust but, when the owner 

dies, the trust becomes irrevocable.3 At 

that stage in the lifecycle of the living 

trust, the funds corresponding to the 

irrevocable trust are insured under 

NCUA’s rules for irrevocable trust 

accounts.4 Under those rules, coverage 

is based on the non-contingent interest 

of each beneficiary named in the trust. 

In effect, when a living trust evolves 

from a revocable trust to an irrevocable 

trust the insurance coverage available 

on the account is based on a different 

set of rules, the irrevocable trust account 

rules. As such, the coverage on the 

account often decreases from what it 

had been when the trust was insured 

solely under the revocable trust rules. 

To eliminate this complexity and the 

confusion it generates, the interim final 

rule provides that the methods for 

determining the coverage of the living 

trust account will remain the same 

when the trust (or part of the trust) 

converts to an irrevocable trust. For 

example, a grantor has a living trust 

account naming three beneficiaries, 

each of whom receives a specified share 

of the trust assets if he or she graduates 

from college by age 25. Under the 

previous insurance rules, when the 

grantor is alive (meaning that the trust 

is still a revocable trust) the maximum 

coverage on the account is $300,000— 

one grantor times three beneficiaries 

times $100,000. Also under the previous 

rules, upon the grantor’s death (allowing 

for the six-month grace period during 

which coverage would remain the 

same), the coverage reduces to $100,000 

(if none of the beneficiaries has 

graduated from college yet) because of 

the contingent nature of the beneficial 

interests provided for in the trust. Under 

the interim rule, contingencies would 

continue to be irrelevant for coverage 

purposes after the grantor’s death, even 

though the trust has evolved into an 

irrevocable trust. In this example, under 

the interim rule the coverage would still 

be up to $300,000. 

NCUA believes the continuity of 

coverage provided for under this 

component of the interim rule will 

greatly simplify previous methods for 

determining coverage for living trust 

accounts. It is important to note, 

however, that under the interim rule the 

coverage on a living trust account could 

still change during the lifecycle of the 

trust. For example, when both grantors 

in a co-grantor trust are alive, the 

maximum coverage on the account 

would be $1,000,000, because the 

formula for determining coverage would 

be: two grantors times five beneficiaries 

times $100,000.5 If one of the grantors 

dies, then the maximum coverage would 

be one grantor times five beneficiaries 

times $100,000.6 Coverage would 

likewise decrease if one or more of the 

beneficiaries named in the revocable 

trust died, assuming the death of the 

beneficiary(ies) would cause the total 

number of beneficiaries to drop below 

five. 

G. Effective Date of the Interim Rule 

The interim rule is effective on 

October 3, 2008, the date on which the 

NCUA Board approved the interim rule 

by notation vote. 12 CFR 791.4. It is also 

the date this interim rule was filed for 

public inspection with the Office of the 

Federal Register. In this regard, NCUA 

invokes the ‘‘good cause’’ exception to 

the requirements in the Administrative 

Procedure Act 7 (APA) that, before a 

rulemaking can be finalized, it must first 

be issued for public comment and, once 

finalized, must have a delayed effective 

date of thirty days from the publication 

date. NCUA believes good cause exists 

for making the interim rule effective 

immediately because, based on recent 

experience, it is clear that many 

members and credit unions do not fully 


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60620 Federal Register / Vol. 73, No. 199 / Tuesday, October 14, 2008 / Rules and Regulations 

8 Id. 

understand the insurance rules for 

revocable trust accounts. Also, the 

Federal Deposit Insurance Corporation 

has recently issued an almost identical 

interim rule and it is important for 

NCUA to do the same immediately to 

maintain parity between the nation’s 

two federal deposit/share insurance 

programs. The interim rule simplifies 

the coverage rules for revocable trust 

accounts and, therefore, will provide 

greater certainty to members and credit 

unions as to how and to what extent 

revocable trust accounts are insured. 

Importantly, under the interim rule, 

no member will be insured for an 

amount less than he or she would have 

been entitled to under the previous 

revocable trust account rules. Some 

members will be entitled to greater 

coverage under the interim rule than 

under previous rules, especially because 

the interim rule eliminates the 

requirement that a beneficiary be a 

‘‘qualifying beneficiary’’ for the account 

owner to be insured on a per-beneficiary 

basis. Moreover, NCUA believes the 

interim final rule will result in faster 

share insurance determinations after a 

credit union closing and will help 

improve public confidence in the credit 

union system. 

For these reasons, NCUA has 

determined that the public notice and 

participation that ordinarily are 

required by the APA before a regulation 

may take effect would, in this case, be 

contrary to the public interest and that 

good cause exists for waiving the 

customary 30-day delayed effective 

date.8 Nevertheless, NCUA desires to 

have the benefit of public comment 

before adopting a permanent final rule 

and invites interested parties to submit 

comments during a 60-day comment 

period. In adopting the final regulation, 

NCUA will revise the interim final rule, 

if appropriate, in light of the comments 

received. 

III. Request for Comments 

NCUA requests comments on all 

aspects of the proposed rulemaking 

including comments on: (1) Whether 

‘‘over $500,000’’ is the proper threshold 

for determining coverage for revocable 

trust account owners based on the 

beneficial interests of the trust 

beneficiaries; (2) whether NCUA’s 

irrevocable trust account rules, 12 CFR 

745.9–1, should be revised so that all 

trusts are covered by substantially the 

same rules; and (3) what effect the 

interim rule will have on the level of 

insured shares. 

IV. Regulatory Procedures 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires NCUA to prepare an analysis to 

describe any significant economic 

impact a rule may have on a substantial 

number of small entities (primarily 

those under ten million dollars in 

assets). This interim final rule simplifies 

and clarifies certain share insurance 

coverages. Accordingly, it will not have 

a significant economic impact on a 

substantial number of small credit 

unions, and therefore, no regulatory 

flexibility analysis is required. 

Paperwork Reduction Act 

NCUA has determined that this rule 

will not increase paperwork 

requirements under the Paperwork 

Reduction Act of 1995 and regulations 

of the Office of Management and 

Budget. 

The Treasury and General Government 

Appropriations Act, 1999—Assessment 

of Federal Regulations and Policies on 

Families 

NCUA has determined that this rule 

will not affect family well-being within 

the meaning of section 654 of the 

Treasury and General Government 

Appropriations Act, 1999, Pub. L. 105– 

277, 112 Stat. 2681 (1998). 

Small Business Regulatory Enforcement 

Fairness Act 

The Small Business Regulatory 

Enforcement Fairness Act of 1996 (Pub. 

L. 104–121) (SBREFA) provides 

generally for congressional review of 

agency rules. A reporting requirement is 

triggered in instances where NCUA 

issues a final rule as defined by Section 

551 of the APA. 5 U.S.C. 551. NCUA 

does not believe this interim final rule 

is a ‘‘major rule’’ within the meaning of 

the relevant sections of SBREFA. NCUA 

has submitted the rule to the Office of 

Management and Budget for its 

determination in that regard. 

Agency Regulatory Goal 

NCUA’s goal is to promulgate clear 

and understandable regulations that 

impose minimal regulatory burden. We 

request your comments on whether this 

rule is understandable and minimally 

intrusive. 

List of Subjects 

12 CFR Part 745 

Credit unions, Share insurance. 

By the National Credit Union 

Administration Board, this 3rd day of 

October 2008. 

Paul Peterson, 

Acting Secretary of the Board. 

■ For the reasons discussed above, 

NCUA amends 12 CFR part 745 as 

follows: 

PART 745—SHARE INSURANCE AND 

APPENDIX 

■ 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. 

■ 2. Section 745.4 is revised to read as 

follows: 

§ 745.4 Revocable trust accounts. 

(a) General rule. Except as provided in 

paragraph (e) of this section, the funds 

owned by a member and deposited into 

one or more accounts with respect to 

which the owner evidences an intention 

that upon his or her death the funds 

shall belong to one or more beneficiaries 

shall be separately insured from other 

types of accounts the owner has at the 

same NCUA-insured credit union in an 

amount equal to the total number of 

different beneficiaries named in the 

account(s) multiplied by the SMSIA. 

This section applies to all accounts held 

in connection with informal and formal 

testamentary revocable trusts. Such 

informal trusts are commonly referred to 

as payable-on-death accounts, in-trustfor accounts or Totten Trust accounts, 

and such formal trusts are commonly 

referred to as living trusts or family 

trusts. Example 1: A member has a 

living trust account with four 

beneficiaries named in the trust. The 

account owner has no other revocable 

trust accounts at the same NCUAinsured credit union. The maximum 

insurance coverage would be $400,000, 

determined by multiplying 4 (the 

number of beneficiaries) times $100,000 

(the current SMSIA). Example 2: A 

member has a payable-on-death account 

naming his niece and cousin as 

beneficiaries and, at the same NCUAinsured credit union, has another 

payable-on-death account naming the 

same niece and a friend as beneficiaries. 

The maximum coverage available to the 

account owner would be $300,000. This 

is because the account owner has named 

three different beneficiaries in the 

revocable trust accounts. The naming of 

the same beneficiary in more than one 

revocable trust account, whether a 

payable-on-death account or living trust 

account, does not increase the total 

coverage amount. 

(b) Required intention. The required 

intention in paragraph (a) of this section 


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that upon the owner’s death the funds 

shall belong to one or more beneficiaries 

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, but 

not limited to, in trust for, as trustee for, 

payable-on-death to, or any acronym 

therefore, or by listing one or more 

beneficiaries in the account records of 

the credit union. In addition, for 

informal revocable trust accounts, the 

beneficiaries must be specifically named 

in the account records of the credit 

union. The settlor of a revocable trust 

shall be presumed to own the funds 

deposited into the account. 

(c) Definition of beneficiary. For 

purposes of this section, a beneficiary 

includes natural persons as well as 

charitable organizations and other nonprofit entities recognized as such under 

the Internal Revenue Code of 1986. 

(d) Interests of beneficiaries outside 

the definition of beneficiary in this 

section. If a beneficiary named in a trust 

covered by this section does not meet 

the definition of beneficiary in 

paragraph (c) of this section, the funds 

corresponding to that beneficiary shall 

be treated as the individually owned 

(single ownership) funds of the 

owner(s). As such, they shall be 

aggregated with any other single 

ownership accounts of such owner(s) 

and insured up to the SMSIA per owner. 

Example: if a member establishes an 

account payable-on-death to a pet, the 

account would be insured as a singleownership account. 

(e) Revocable trust accounts with 

aggregate balances exceeding five times 

the SMSIA and naming more than five 

different beneficiaries. Notwithstanding 

the general coverage provisions in 

paragraph (a) of this section, for funds 

owned by a member in one or more 

revocable trust accounts naming more 

than five different beneficiaries and 

whose aggregate balance is more than 

five times the SMSIA, the maximum 

revocable trust account coverage for the 

account owner shall be the greater of 

either: five times the SMSIA or the 

aggregate amount of the ownership 

interests of each different beneficiary 

named in the trusts, to a limit of the 

SMSIA per different beneficiary. 

Example: A has a living trust account 

with a balance of $600,000. Under the 

terms of the trust, upon A’s death, A’s 

three children are each entitled to 

$50,000, A’s friend is entitled to $5,000 

and a designated charity is entitled to 

$70,000. The trust also provides that the 

remainder of the trust assets shall 

belong to A’s spouse. In this case, 

because the balance of the account is 

over $500,000, which is five times the 

current SMSIA of $100,000, and there 

are more than five different beneficiaries 

named in the trust, the maximum 

coverage available to A would be the 

greater of: $500,000 or the aggregate of 

each different beneficiary’s interest to a 

limit of $100,000 per beneficiary. The 

beneficial interests in the trust 

considered for purposes of determining 

coverage are: $50,000 for each of the 

children (totaling $150,000), $5,000 for 

the friend, $70,000 for the charity, and 

$100,000 for the spouse ($375,000, 

subject to the $100,000 limit per 

beneficiary). The aggregate beneficial 

interests, thus, are $325,000. Hence, the 

maximum coverage afforded to the 

account owner would be $500,000, the 

greater of $500,000 or $325,000.) 

(f) Joint revocable trust accounts. (1) 

Where an account described in 

paragraph (a) of this section is 

established by more than one owner, the 

respective interest of each account 

owner (which shall be deemed equal) 

shall be insured separately, per different 

beneficiary, up to the SMSIA, subject to 

the limitation imposed in paragraph (e) 

of this section. Example 1: A and B, two 

individuals, establish a payable-ondeath account naming their three nieces 

as beneficiaries. Neither A nor B has any 

other revocable trust accounts at the 

same NCUA-insured credit union. The 

maximum coverage afforded to A and B 

would be $600,000, determined by 

multiplying the number of owners (2) 

times the SMSIA (currently $100,000) 

times the number of different 

beneficiaries (3). In this example, A 

would be entitled to revocable trust 

coverage of $300,000 and B would be 

entitled to revocable trust coverage of 

$300,000. Example 2: A and B, two 

individuals, establish a payable-ondeath account naming their two 

children, two cousins and a charity as 

beneficiaries. The balance in the 

account is $700,000. Neither A nor B 

has any other revocable trust accounts at 

the same NCUA-insured credit union. 

The maximum coverage would be 

determined under paragraph (a) of this 

section by multiplying the number of 

account owners (2) times the number of 

different beneficiaries (5) times 

$100,000, or $1 million. Because the 

account balance is less than the 

maximum coverage amount, the account 

would be fully insured. 

Example 3: A and B, two individuals, 

establish a living trust account with a 

balance of $1.5 million. Under the terms 

of the trust, upon the death of both A 

and B, each of A’s and B’s three 

children is entitled to $200,000, B’s 

cousin is entitled to $150,000, A’s friend 

is entitled to $30,000, and the remaining 

amount ($720,000) goes to a charity. 

Under paragraph (e) of this section, the 

maximum coverage, as to each joint 

account owner, would be the greater of 

$500,000 or the aggregate amount (as to 

each joint owner) of the interest of each 

different beneficiary named in the trust, 

to a limit of $100,000 per account owner 

per beneficiary. The beneficial interests 

in the trust considered for purposes of 

determining coverage for account owner 

A are: $300,000 for the children (three 

times $100,000), $75,000 for the cousin, 

$15,000 for the friend, and $100,000 for 

the charity ($360,000 subject to the 

$100,000 per-beneficiary limitation). As 

to A, the aggregate amount of the 

beneficial interests eligible for share 

insurance coverage is $490,000. Hence, 

the maximum coverage afforded to joint 

account owner A would be $500,000, 

the greater of $500,000 or $490,000 (the 

aggregate of all the beneficial interests 

attributable to A, limited to $100,000 

per beneficiary). The same analysis and 

coverage determination also would 

apply to B. 

(2) Notwithstanding paragraph (f)(1) 

of this section, where the owners of a 

joint revocable trust account are 

themselves the sole beneficiaries of the 

corresponding trust, the account shall 

be insured as a joint account under 

section 745.8 and shall not be insured 

under the provisions of this section. 

Example: If A and B establish a payableon-death account naming themselves as 

the sole beneficiaries of the account, the 

account will be insured as a joint 

account because the account does not 

satisfy the intent requirement under 

paragraph (a) of this section that the 

funds in the account belong to the 

named beneficiaries upon the owners’ 

death. The beneficiaries are in fact the 

actual owners of the funds during the 

account owners’ lifetimes. 

(g) For accounts held in connection 

with a living trust that provides for a 

life-estate interest for designated 

beneficiaries, NCUA shall value each 

such life estate interest as the SMSIA for 

purposes of determining the insurance 

coverage available to the account owner. 

(h) Revocable trusts that become 

irrevocable trusts. Notwithstanding the 

provisions in section 745.9–1 on the 

insurance coverage of irrevocable trust 

accounts, a revocable trust account shall 

continue to be insured under the 

provisions of this section even if the 

corresponding revocable trust, upon the 

death of one or more of the owners 

thereof, converts, in part or entirely, to 

an irrevocable trust. Example: Assume 

A and B have a trust account in 

connection with a living trust, of which 

they are joint grantors. If upon the death 

of either A or B the trust transforms into 

an irrevocable trust as to the deceased 


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60622 Federal Register / Vol. 73, No. 199 / Tuesday, October 14, 2008 / Rules and Regulations 

grantor’s ownership in the trust, the 

account will continue to be insured 

under the provisions of this section. 

(i) This section shall be effective as of 

October 14, 2008 for all existing and 

future revocable trust accounts and for 

existing and future irrevocable trust 

accounts resulting from formal 

revocable trust accounts. 

Appendix to Part 745—[Amended] 

■ 3. The appendix to part 745 is 

amended by removing Section B and by 

redesignating Sections C through G as B 

through F respectively. 

[FR Doc. E8–23922 Filed 10–10–08; 8:45 am] 

BILLING CODE 7535–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2008–0983; Airspace 

Docket No. 08–ASO–14] 

Modification of Class D Airspace; 

MacDill AFB, FL 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Direct final rule, request for 

comments. 

SUMMARY: This action modifies Class D 

Airspace at MacDill AFB, FL. The 

MacDill AFB Air Traffic Control Tower 

no longer operates on a full time basis; 

therefore, the Class D Airspace 

associated with the tower operations 

must be modified to reflect the times 

when the controlled airspace is 

effective. This action enhances the 

National Airspace System by relaxing 

the restrictions to the controlled 

airspace areas in the vicinity of MacDill 

AFB, FL. 

DATES: Effective 0901 UTC, January 15, 

2009. The Director of the Federal 

Register approves this incorporation by 

reference action under title 1, Code of 

Federal Regulations, part 51, subject to 

the annual revision of FAA Order 

7400.9 and publication of conforming 

amendments. Comments for inclusion 

in the Rules Docket must be received on 

or before November 28, 2008. 

ADDRESSES: Send comments on this rule 

to: U.S. Department of Transportation, 

Docket Operations, West Building 

Ground Floor, Room W12–140, 1200 

New Jersey Avenue, SE., Washington, 

DC 20590–0001; Telephone: 1–800– 

647–5527; Fax: 202–493–2251. You 

must identify the Docket Number FAA– 

2008–0983; Airspace Docket No. 08– 

ASO–14, at the beginning of your 

comments. You may also submit and 

review received comments through the 

Internet at http://www.regulations.gov. 

You may review the public docket 

containing the rule, any comments 

received, and any final disposition in 

person in the Dockets Office (see 

ADDRESSES section for address and 

phone number) between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal Holidays. An informal docket 

may also be examined during normal 

business hours at the office of the 

Eastern Service Center, Federal Aviation 

Administration, Room 210, 1701 

Columbia Avenue, College Park, Georgia 

30337. 

FOR FURTHER INFORMATION CONTACT: 

Melinda Giddens, Operations Support 

Group, Federal Aviation 

Administration, P.O. Box 20636, 

Atlanta, Georgia 30320; Telephone (404) 

305–5610, Fax 404–305–5572. 

SUPPLEMENTARY INFORMATION: 

The Direct Final Rule Procedure 

The FAA anticipates that this 

regulation will not result in adverse or 

negative comments, and, therefore, 

issues it as a direct final rule. The FAA 

has determined that this rule only 

involves an established body of 

technical regulations for which frequent 

and routine amendments are necessary 

to keep them operationally current. 

Unless a written adverse or negative 

comment or a written notice of intent to 

submit an adverse or negative comment 

is received within the comment period, 

the regulation will become effective on 

the date specified above. After the close 

of the comment period, the FAA will 

publish a document in the Federal 

Register indicating that no adverse or 

negative comments were received and 

confirming the effective date. If the FAA 

receives, within the comment period, an 

adverse or negative comment, or written 

notice of intent to submit such a 

comment, a document withdrawing the 

direct final rule will be published in the 

Federal Register, and a notice of 

proposed rulemaking may be published 

with a new comment period. 

Comments Invited 

Although this action is in the form of 

a direct final rule, and was not preceded 

by a notice of proposed rulemaking, 

interested persons are invited to 

comment on this rule by submitting 

such written data, views, or arguments 

as they may desire. The direct final rule 

is used in this case to facilitate the 

timing of the charting schedule and 

enhance the operation at the airport, 

while still allowing and requesting 

public comment on this rulemaking 

action. An electronic copy of this 

document may be downloaded from and 

comments submitted through http:// 

www.regulations.gov. Communications 

should identify both docket numbers 

and be submitted in triplicate to the 

address specified under the caption 

ADDRESSES above or through the Web 

site. All communications received on or 

before the closing date for comments 

will be considered, and this rule may be 

amended or withdrawn in light of the 

comments received. Recently published 

rulemaking documents can also be 

accessed through the FAA’s Web page at 

http://www.faa.gov or the Federal 

Register’s Web page at http:// 

www.gpoaccess.gov/fr/index.html. 

Comments are specifically invited on 

the overall regulatory, economic, 

environmental, and energy aspects of 

the rule that might suggest a need to 

modify the rule. Factual information 

that supports the commenter’s ideas and 

suggestions is extremely helpful in 

evaluating the effectiveness of this 

action and determining whether 

additional rulemaking action would be 

needed. All comments submitted will be 

available, both before and after the 

closing date for comments, in the Rules 

Docket for examination by interested 

persons. Those wishing the FAA to 

acknowledge receipt of their comments 

submitted in response to this rule must 

submit a self-addressed, stamped 

postcard on which the following 

statement is made: ‘‘Comments to 

Docket No. FAA–2008–0983; Airspace 

Docket No. 08–ASO–14.’’ The postcard 

will be date stamped and returned to the 

commenter. 

The Rule 

This amendment to Title 14, Code of 

Federal Regulations (14 CFR) part 71 

modifies Class D airspace at MacDill 

AFB, FL, by adding to the description of 

the controlled airspace area the hours of 

operation of the Air Traffic Control 

Tower (ATCT) at MacDill AFB. The 

ATCT at MacDill AFB operates on an 

other than full-time basis and, therefore, 

the Class D Airspace associated with the 

tower operations must be modified to 

reflect the times when the controlled 

airspace is effective. Controlled airspace 

extending upward from the surface of 

the Earth is required to encompass the 

airspace necessary for instrument 

approaches for aircraft operating under 

Instrument Flight Rules (IFR). The 

current Class D airspace areas are 

sufficient for these approaches, so no 

additional controlled airspace must be 

defined. Effective times for the MacDill 

AFB Class D airspace areas will be 

published first by Notice to Airman, and 

then thereafter published continuously 


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