Share Insurance Coverage After a Member's Death
A member, Mr. Delgado, dies with the following accounts at the same federally insured credit union: (1) a single ownership share account of $180,000; (2) a joint account with his wife of $400,000 (tenants by the entirety, right of survivorship); (3) a payable-on-death (POD) account naming his two adult children, $500,000; (4) an irrevocable trust account for his three grandchildren, $750,000. The wife is not a beneficiary of the POD or trust accounts. The credit union's share insurance limit is the standard federal maximum. The estate asks how much is insured and what happens to any excess.
1. Determine the insured amount for each account category and total coverage.
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Apply the standard federal share insurance rules category by category. (1) Single account: insured up to $250,000 per member per credit union - $180,000 fully insured. (2) Joint account: joint accounts are insured up to $250,000 per co-owner; with two co-owners, coverage is $500,000 - $400,000 fully insured. (3) POD account: POD/revocable trust coverage is $250,000 per named beneficiary; two children = $500,000 - $500,000 fully insured. (4) Irrevocable trust: irrevocable trust accounts are insured up to $250,000 per beneficiary if the beneficiary's interest is ascertainable; three grandchildren = $750,000 - fully insured. Total insured: $180,000 + $400,000 + $500,000 + $750,000 = $1,830,000, all within limits. No excess. Note: coverage depends on the account titling and beneficiary designations actually on file - verify the records.
2. What if the POD account had named only one child and held $500,000?
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With one named POD beneficiary, coverage is $250,000; the remaining $250,000 is uninsured. The credit union should have flagged this at account opening and offered restructuring (e.g., adding a second beneficiary or splitting into separate accounts). Post-death: the uninsured $250,000 is a claim against the credit union's assets in the same priority as other uninsured claims; the beneficiary may recover only after insured deposits are paid. Practical lesson: the credit union's new-account and account-review processes should verify beneficiary designations and coverage limits, especially for large balances. Document any member communication about restructuring. Do not promise coverage the credit union cannot deliver - the insurance determination is made by the insurer, not the credit union.