Joint-ownership share accounts final rule

At its February meeting last week, the National Credit Union Administration (NCUA) Board approved a final rule that provides federally insured credit unions (FICUs) with more flexibility in determining when a share account can be insured separately as a joint account.

Under the current rules, section 745.8(a) of NCUA’s rules and regulations permits FICUs to insure qualifying joint accounts separately from individual accounts. “Qualifying joint account” has a specific meaning under the current rule: “A joint account is a qualifying joint account if each of the co-owners has personally signed a membership or account signature card and has a right of withdrawal on the same basis as the other co-owners.” As noted in the preamble to the final rule, the consequence of an account not being a qualifying joint account is that a co-owner’s interest in that nonqualifying account is treated as an individual account and aggregated with the co-owner’s other individual accounts and insured up to the standard maximum share insurance amount, $250,000.

The final rule mirrors a change made by the FDIC for federally insured depository institutions and is intended to “better facilitate the prompt payment of share insurance in the event of a FICU’s failure by explicitly providing alternative methods that the NCUA could use to determine the owners of joint accounts, consistent with the NCUA’s statutory authority.” NCUA noted that neither the Federal Credit Union Act or NCUA’s rules and regulations defines what constitutes a membership card or an account signature card. NCUA explained that it has permitted FICUs to comply with the current qualifying joint account requirements “through various forms of documentation used in their account opening processes.”


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