Disclaimer: The following definitions or terms in this glossary have been provided solely to describe their use consistent with NCUA share insurance coverage. Some words or terms, especially those that are common in legal usage, may have different or additional definitions outside of this context.
Account or Accounts: Means share, share certificates, or share draft accounts (or their equivalent under state law, as determined by the NCUA Board in the case of insured state credit unions) of a member (which includes other credit unions, public units and nonmembers where permitted under the Federal Credit Union Act) in a credit union of a type approved by the NCUA 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.
Account Balance: The dollar amount including principal and dividends earned in the ordinary course of business and posted for any prior accounting or dividend period for a specific account. Some state chartered credit unions are authorized to pay interest. Interest earned and posted by federally insured state chartered credit unions would be part of the account balance.
Account Owner: The owner of the funds deposited into an account at a federally insured credit union. An account owner is an individual, business/organization, or government entity. The account owner is the insured party on an account.
Account Ownership Type: A specific form of account ownership as set forth in the NCUA share insurance regulations. When the requirements for each ownership category are met, the shares held in an ownership category receive separate NCUA insurance coverage. The most common ownership categories are: single; certain retirement; joint; revocable trust; irrevocable trust; employee benefit plan; corporation, partnership and unincorporated association; and public unit.
Account Records: Account records include signature cards, share certificates, passbooks, account ledgers, and computer records that relate to the credit union's share-taking function.
Account Share Type: The share instrument (e.g., savings, share draft/checking, share certificate, money market, etc.) into which funds are deposited.
Agent: An individual authorized to act on behalf of another person or entity, the principal.
Agent Account: An account established by an individual or legal entity on behalf of the owner of the funds. See also Fiduciary Account and Power of Attorney.
Beneficiary: A person or entity named or identified in either the credit union account records or in a written trust that will have an interest in the trust upon the account owner's death. Irrevocable trust agreements often contain additional conditions which must be met before a beneficiary is entitled to receive funds.
Certain Retirement Accounts: Certain retirement accounts are a separate account ownership type, and include shares in the following types of accounts:
Credit Union Lookup (also known as Research a Credit Union): This utility provides a text based search criteria and can be used to find a credit union based on a variety of search parameters. Once you select a specific credit union, you can view further information pertaining to that credit union such as the Profile (contact information, branch locations, and services offered) and financial information such as the validated quarterly Call Report Submission.
Corporation: An incorporated business that includes both for-profit and not-for-profit entities. Corporation accounts, together with partnership and unincorporated association accounts are a separate ownership category.
Corporation, Partnership, or Unincorporated Association Account: An account held in the name of a corporation, partnership or unincorporated association engaged in independent activity. Corporation, partnership, and unincorporated association accounts are a separate account ownership category. This category does not, however, include accounts held in the name of a sole proprietorship. Shares held in the name of a sole proprietorship are insured in the single account ownership category, as the personal shares of the business owner.
Custodial Account: A fiduciary account where a custodian transacts business on the account on behalf of the actual owner of the funds, usually a minor.
Decedent Account: Funds of a decedent held in the name of the decedent, or in the name of the executor or administrator of the decedent's estate, and deposited in one or more accounts shall be insured up to the Standard Maximum Share Insurance Amount in the aggregate for all such accounts, separately from the individual accounts of the beneficiaries of the estate or of the executor or administrator.
Eligible Beneficiary: To qualify as an eligible beneficiary, the beneficiary must be a living person, a charity or a non-profit organization. If a charity or non-profit organization is named as beneficiary, it must qualify as such under Internal Revenue Service (IRS) regulations.
Employer/Tax Identification Number (EIN/TIN): The IRS tax identification number used by entities to identify or to file tax returns or tax-exempt forms.
Failed Credit Union: A federally insured credit union closed by its chartering authority.
Fiduciary Account: Accounts owned by one party but held in a fiduciary capacity by another party. Fiduciary relationships may include, but are not limited to, an agent, nominee, guardian, executor, or custodian. Common fiduciary accounts include Uniform Transfer to Minors Act (UTMA) accounts, escrow accounts, and Interest on Lawyers Trust Accounts (IOLTAs).
Formal Revocable Trust: Formal revocable trusts are created for estate planning purposes, usually by legal counsel, and are also called Family Trust Accounts or Living Trust Accounts.
Government Account: An account established by an official custodian containing funds of a public unit or political subdivision. Also known as Public Unit Accounts. Government accounts are a separate account ownership type.
Independent Activity: A corporation, partnership, or unincorporated association shall be deemed to be engaged in an independent activity if the entity is operated primarily for some purpose other than to increase share insurance coverage.
Individual Retirement Account (IRA): IRA and Roth IRA accounts will be combined together and insured in the aggregate up to $250,000. A Keogh account will be separately insured from an IRA account, Roth IRA account or, where applicable, aggregated IRA and Roth IRA accounts.
Informal Revocable Trust: Informal revocable trusts are created when the account owner signs an agreement, usually part of the credit union’s signature card, stating that the funds are payable to one or more beneficiaries upon the owner’s death. Informal revocable trust accounts are also called payable on death (POD) accounts, in trust for (ITF) accounts, testamentary or Totten trust accounts.
Insurance Regulations: The regulations governing the amount of insurance coverage provided by the NCUA at an insured credit union.
Insured Shares: Shares at a federally insured credit union with balances equal to or less than the applicable Standard Maximum Share Insurance Amount.
Irrevocable Trust Account: A share account held in the name of a written trust in which the owner (the person who created the trust) does not possess power to terminate or revoke the trust agreement although the owner may have a retained interest in the assets of the trust. An irrevocable trust may be created upon the death of the settlor of a revocable living trust, the actual execution or creation of an irrevocable trust agreement, or by statute, or a court order. Irrevocable trust accounts are a separate account ownership type. Because most irrevocable trusts may not qualify for per-beneficiary coverage, NCUA's Share Insurance Estimator does not ask for beneficiary information. Due to the complexity of irrevocable trusts, you, your attorney, or your financial advisor should consult with the NCUA regarding share insurance coverage.
Joint Account: A share account owned by two or more people, with equal withdrawal rights, that does not name beneficiaries. Joint accounts are a separate account ownership type. An account will not fail to qualify as a joint account if a joint owner is a minor and applicable state law limits or restricts a minor's withdrawal rights. All co-owners of a joint account must sign the share account signature card unless the account is a share certificate or is established by an agent, nominee, guardian, custodian, executor, or conservator. 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 joint-owner's interest.
Keogh Account: A type of retirement account separately insured from IRA and Roth IRA accounts.
Life Estate Beneficiary: An owner who identifies a beneficiary as having a life estate interest in a formal revocable trust is entitled to insurance coverage up to $250,000 for that beneficiary. A life estate beneficiary is a beneficiary who has the right to receive income from the trust or to use trust funds during the beneficiary's lifetime, where other beneficiaries receive the remaining trust funds after the life estate beneficiary dies.
LLC (Limited Liability Company or Limited Liability Corporation): A business entity with characteristics of both corporations and partnerships. If engaged in an independent activity, a limited liability company or limited liability corporation receives separate share insurance coverage in the Corporation, Partnership, and Unincorporated Association account ownership type.
Member: Those persons enumerated in the federally insured credit union's field of membership who have been elected to membership in accordance with the Federal Credit Union Act or state law in the case of state credit unions. It also includes those nonmembers permitted under the Federal Credit Union Act to maintain accounts in an insured credit union, including nonmember credit unions and nonmember public units and political subdivisions.
Money Market Account (MMA): A savings account that allows the owner to make a limited number of transactions each month. Since it is a share account, an MMA is subject to NCUA insurance coverage. An MMA is an account share type, not an account ownership type. The amount of NCUA insurance coverage available to the owner(s) of an MMA depends on the ownership category (single, joint, trust, etc.,) in which the MMA is held.
Mortgage Servicing Account: Accounts maintained by a mortgage servicer, in a custodial or other fiduciary capacity, which are comprised of payments by mortgagors of principal and interest, shall be insured for the cumulative balance paid into the account by the mortgagors, up to the limit of the Standard Maximum Share Insurance Amount 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 accounts held by agents or nominees for the ownership interest of each mortgagor in such accounts.
National Credit Union Share Insurance Fund (NCUSIF): The fund maintained by the NCUA to insure shares at failed credit unions.
Non-Contingent Interest: A participant's share in a trust or employee benefit plan that is determinable without contingencies.
Non-Share Investment Products: Products that include stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities. Because they are not shares, NCUA does not insure these investments, even if they are sold at a federally insured credit union.
Official Custodian: An official custodian is an officer, employee, or agent of a public unit having official custody of public funds and lawfully depositing the funds in an insured institution. In order to qualify as an official custodian, a person must have plenary (i.e. unqualified, absolute) authority, including control, over the funds. Control of public funds includes possession as well as the authority to establish accounts in insured depository institutions and to make deposits, withdrawals, and disbursements. For assistance in determining who the Official Custodian is for a given public unit, contact the legal counsel for the public unit.
Organizations: See Corporation, Partnership, or Unincorporated Association Accounts.
Partnership: An association of two or more persons or entities formed to carry on as co-owners of an unincorporated business. Partnership accounts, together with corporation and unincorporated association accounts, are a separate account ownership type.
Pass-through Share Insurance: Share insurance coverage that is provided for the non-contingent interest of each participant in an employee benefit plan. An insured credit union that is not “well capitalized” or “adequately capitalized,” as those terms are defined in 12 U.S.C. 1790d(c), may not accept employee benefit plan deposits. Pass-through coverage also applies when a fiduciary deposits funds on behalf of a client provided certain requirements, such as record-keeping and titling, are met.
Political Subdivision: The term political subdivision includes any subdivision of a public unit, as defined below, 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.
Power of Attorney: A written statement identifying a person as the agent for another with powers stated in the document. Full power may be granted, or the authority may be limited to certain functions, such as making deposits and withdrawals from a share draft/checking account. The Power of Attorney must be drafted in conformance with state requirements.
Public Unit Account: The term 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.
Revocable Trust Account: A share account held in the name of either an informal or formal trust in which the owner (settlor) retains control over the funds during his or her lifetime but also identifies beneficiaries who will receive trust assets upon his or her death. Revocable trust accounts are a separate account ownership type. Formal revocable trusts are created for estate planning purposes and are also called Family Trust Accounts or Living Trust Accounts. Informal revocable trusts are created when the account owner signs an agreement, usually part of the credit union’s signature card, stating that the funds are payable to one or more beneficiaries upon the owner’s death. Informal revocable trust accounts are also called payable on death (POD) accounts, in trust for (ITF) accounts, testamentary or Totten trust accounts.
Safe Deposit Box: Secure storage provided by some credit unions for their members. Since they are not shares, the contents of a safe deposit box are not insured by the NCUA.
Settlor: A person who establishes a revocable or irrevocable trust. This person is also referred to as the trust owner or grantor. The term trustor may also mean settlor.
Shares: Funds placed with a federally insured credit union and eligible for NCUA insurance coverage.
Share Certificate: A savings instrument that pays dividend for specific period of time (term), at either a set or variable rate, and which is redeemable upon maturity. A share certificate is a share type, not an account ownership type. The amount of coverage available to the owner of a share certificate depends on the ownership type (single, joint, trust, IRA) in which the share certificate is held and what other share accounts the owner holds in that same category at the same credit union. Also called Time or Term Certificates.
Share Draft Account: An account from which the authorized holder can withdraw shares by means of a negotiable or transferable instrument or other order. Also called a checking account.
Share Insurance Estimator: The Share Insurance Estimator allows users to enter information on their share accounts at a federally insured credit union and generate a report showing what funds are insured and what funds (if any) are uninsured.
Single Ownership Account: An account in the name of one individual with no named beneficiaries. Single (also called individual) accounts are a separate account ownership type.
Sole Proprietorship: An unincorporated business in which all assets are owned by one person. Owners of sole proprietorships may use their own social security number or an employer identification number (EIN). It is important to determine if a business account is held by a sole proprietorship or an incorporated business because incorporated businesses are insured in a category separate from single accounts. Sole Proprietorship accounts are insured in the single account category as the personal shares of the owner. The phrase Doing Business As (DBA) in the account title usually signifies that the account is held by a sole proprietorship.
Standard Maximum Share Insurance Amount: Referred to as the “SMSIA”. The basic NCUA insurance amount of $250,000 is per account holder, per credit union, per ownership type. Shares held in different ownership types such as single, joint, trust, and retirements are separately insured, when the requirements for each ownership type are met, even if held at the same credit union.
Trust Accounts: Includes Revocable and Irrevocable Trusts. Revocable Trust accounts are a separate account ownership type. Irrevocable Trust accounts are a separate account ownership type.
Trustee: Generally the term trustee means the person authorized to transact business on behalf of a trust.
Uninsured Shares: The portion of an accountholder’s share account(s) that exceeds the applicable NCUA insurance limit. Accountholders with uninsured funds may recover some portion of this amount upon the liquidation of the failed credit union assets.