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(b) If the named beneficiary of such an account is other than the owner's spouse, child or grandchild, the funds in such account shall be added to any individual accounts of such owner and insured up to $40,000 in the aggregate.

[32 F.R. 10415, July 14, 1967, as amended at 35 FR 179, Jan. 6, 1970; 39 FR 41243, Nov. 26, 1974]

§ 564.5

Accounts held by executors or administrators.

Funds of a decedent held in the name of the decedent or in the name of the executor or administrator of his estate and invested in one or more accounts shall be insured up to $40,000 in the aggregate, separately from the individual accounts of the beneficiaries of the estate or of the executor or administrator.

[32 F.R. 10415, July 14, 1967, as amended at 35 FR 179, Jan. 6, 1970; 39 FR 41243, Nov. 26, 1974] § 564.6

Accounts held by a corporation

or partnership.

Accounts of a corporation or partnership engaged in any independent activity shall be insured up to $20,000 in the aggregate. An account of a corporation or partnership not engaged in an independent activity shall be deemed to be owned by the person or persons owning such corporation or comprising such partnership and, for insurance purposes, the interest of each person in such account shall be added to any other accounts individually owned by such person and insured up to $40,000 in the aggregate.

[32 F.R. 10415, July 14, 1967, as amended at 35 FR 179, Jan. 6, 1970; 39 FR 41243, Nov. 26, 1974]

§ 564.7

Accounts held by an unincorporated association.

Accounts of an unincorporated association engaged in any independent activity shall be insured up to $20,000 in the aggregate. An account of an unincorporated association not engaged in an independent activity shall be deemed to be owned by the persons comprising such association and, for insurance purposes, the interest of each owner in such account shall be added to any other accounts individually owned by such person and insured up to $40,000 in the aggregate.

[32 F.R. 10415, July 14, 1967, as amended at 35 FR 179, Jan. 6, 1970; 39 FR 41243, Nov. 26, 1974]

§ 564.8 Public unit accounts.

(a) (1) Each official custodian of funds of the United States lawfully investing the same in an insured institution shall be separately insured up to $100,000.

(2) Each official custodian of funds of any State of the United States or any county, municipality, or political subdivision thereof lawfully investing the same in an insured institution in the same State shall be separately insured up to $100,000. Each such official custodian lawfully investing such funds in an insured institution outside the same State shall be separately insured up to $40,000.

(3) Each official custodian of funds of the District of Columbia lawfully investing the same in an insured institution in the District of Columbia shall be separately insured up to $100,000. Each such official custodian lawfully investing such funds in an insured institution outside the District of Columbia shall be separately insured up to $40,000.

(4) Each official custodian of funds of the Commonwealth of Puerto Rico, or the Virgin Islands, or of any county, municipality, or political subdivision thereof lawfully investing the same in an insured institution in Puerto Rico or the Virgin Islands, respectively, shall be separately insured up to $100,000. Each such official custodian lawfully investing such funds in an insured institution outside Puerto Rico or the Virgin Islands, respectively, shall be insured up to $40,000. Each official custodian of funds of any other territory of the United States or any county, municipality or political subdivision thereof lawfully investing the same in an insured institution shall be insured up to $40,000.

(5) For purposes of this paragraph (a) if the same person is an official custodian of more than one public unit, he shall be separately insured with respect to the public funds held by him for each such unit.

(b) Public bond issues. Where an officer, agent or employee of a public unit has custody of certain funds which by law or under the bond indenture are required to be paid to the holders of bonds issued by the public unit, any investment of such funds in an insured institution shall be deemed to be an investment by & trustee of trust funds of which the bondholders are pro rata beneficiaries, and

each such beneficial interest shall be separately insured up to $40,000.

[32 FR 10415, July 14, 1967, as amended at 35 FR 179, Jan. 6, 1970; 39 FR 41243, Nov. 26 1974]

§ 564.9 Joint accounts.

(a) Separate insurance coverage. Accounts owned jointly, whether as joint tenants with right of suvivorship, as tenants by the entireties, as tenants in common, or by husband and wife as community property, shall be insured separately from accounts individually owned by the co-owners.

(b) Qualifying joint accounts. A joint account shall be deemed to exist for purpose of insurance of accounts, only if each co-owner has personally executed an account signature card and possesses withdrawal rights. The foregoing provisions of this paragraph (b) shall not be applicable with respect to any account evidenced by a certificate of deposit which was issued pursuant to $545.1-5 of this chapter or evidenced by a certificate which was issued pursuant the approval granted by § 563.3-3 of this chapter.

(c) Failure to qualify. An account owned jointly which does not qualify as a joint account for purposes of insurance of accounts shall be treated as owned by the named persons as individuals and the actual ownership interest of each such person in such account shall be added to any other accounts individually owned by such person and insured up to $20,000 in the aggregate.

(d) Same combination of individuals. All joint accounts owned by the same combination of individuals shall first be added together and insured up to $40,000 in the aggregate.

(e) Interest of each co-owner. The interests of each co-owner in all joint accounts owned by different combinations of individuals shall then be added together and insured up to $40,000 in the aggregate.

[32 FR. 10415, July 14, 1967, as amended at 35 FR 179, Jan. 6, 1970, as amended at 39 FR 29340, Aug. 15, 1974; 39 FR 41243, Nov. 26, 1974]

§ 564.10 Trust accounts.

All trust estates for the same beneficlary invested in accounts established pursuant to valid trust arrangements created by the same settlor (grantor) shall be added together and insured up to $40,000 in the aggregate, separately from other accounts of the trustee of

such trust funds or the settlor or beneficiary of such trust arrangements.

[32 F.R. 10415, July 14, 1967, as amended at 35 FR 179, Jan. 6, 1970; 39 FR 41243, Nov. 26 1974]

§ 564.11

Continuation of prior coverage.

All accounts insured under the rules and interpretations heretofore in effect shall continue to be insured, anything in this part to the contrary notwithstanding, until April 15, 1968.

§ 564.12 Notification of account holders. Each insured institution is required to provide notice of these amendments to the rules and regulations for Insurance of Accounts, not later than April 1, 1968, to the holders of each account which had a balance in excess of $5,000 at the close of the last dividend period prior to notification. Such notice shall consist of mailing to such holders, at their last known address as shown on the records of the institution, a question and answer brochure on insurance of accounts prepared by the Federal Savings and Loan Insurance Corporation. Such brochure shall also be made available to the public at each office of an insured institution. Additional explanatory materials may also be sent to account holders at the option of the insured institution.

(Secs. 402, 403, 48 Stat. 1256, 1257, as amended; 12 U.S.C. 1725, 1726. Reorg. Plan No. 3 of 1947, 12 F.R. 4981, 3 CFR, 1943-48 Comp., p. 1071)

APPENDIX-EXAMPLES OF INSURANCE COVERAGE AFFORDED ACCOUNTS IN INSTITUTIONS INSURED BY THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION

The following examples illustrate insurance coverage on accounts maintained in the same insured institution. They are intended to cover various types of ownership interests and combinations of accounts which may occur in connection with funds invested in insured institutions. These examples interpret the rules for insurance of accounts contained in 12 CFR Part 564.

The examples, as well as the rules which they interpret are predicated upon the assumption that invested funds are actually owned in the manner indicated on the institution's records. If available evidence shows that ownership is different from that on the institution's records, the Federal Savings and Loan Insurance Corporation may pay claims for insured accounts on the basis of actual rather than ostensible ownership.

A. Single ownership accounts. All funds owned by an individual (or by the husbandwife community of which the individual is a member) and invested by him in one or more individual accounts are added together and

insured to the $40,000 maximum. This is true whether the accounts are maintained in the name of the individual owning the funds, in the name of his agent or nominee, or in the name of a guardian, conservator or custodian holding the funds for his benefit.

EXAMPLE 1

Question: A and B, husband and wife, each maintain an individual account containing $40,000. In addition, they hold a joint account containing $40,000. What is the insurance coverage?

Answer: Each account is separately insured to $40,000, for a total coverage of $120,000. The coverage would be the same whether the individual accounts contain funds owned as community property or as individual property of the spouses. (§ 564.3(a) and § 564.9(a)).

EXAMPLE 2

Question: H and W, husband and wife, reside in a community property state. H maintains a $40,000 account consisting of his separately owned funds and invests $40,000 of community property funds in another account, both of which are in his name alone. What is the insurance coverage?

Answer: The two accounts are added together and insured to a total of $40,000. $40,000 is uninsured. (§ 564.3(a)).

EXAMPLE 3

Question: A has $37,000 invested in an individual account, and his agent, B, invests $10,000 of A's funds in a properly designated agency account. B also holds a $40,000 individual account. What is the insurance coverage?

Answer: A's individual account and the agency account are added together and insured to the $40,000 maximum, leaving $7,000 uninsured. The investment of funds through an agent does not result in additional insurance coverage for the principal. (§ 564.3(b)). B's individual account is insured separately from the agency account. (§ 564.3(a)). However, if the account records of the institution do not show the agency relationship under which the funds in the $10,000 account are held, the $10,000 in B's name could, at the option of the Insurance Corporation, be added to his individual account and insured to $40,000 in the aggregate, leaving $7,000 uninsured. (§ 564.2(b)(1)).

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funds in the $10,000 account, the Insurance Corporation may, at its option, add these funds to the $40,000 individual account held by A (rather than to B's $37,000 account) and insure the total of $50,000 to the $40,000 maximum, leaving $10,000 uninsured. In that event B's $37,000 individual account would be separately insured. (§ 564.3 (a) and (b)).

EXAMPLE 5

Question: C, a minor, maintains an individual account of $300 in connection with a school savings program. C's grandfather makes a gift to him of $40,000, which is invested in another account by C's father, designated on the institution's records as custodian under a Uniform Gifts to Minors Act. C's father also maintains an individual account of $40,000. What is the insurance coverage?

Answer: C's individual account and the custodianship account held for him by his father are added together and would be insured to the $40,000 maximum. (§ 564.3(c)). The individual account held by C's father is separately insured. (§ 564.3 (a)).

EXAMPLE 6

Question: G, a court appointed guardian, invests in a properly designated account $40,000 of funds in his custody which belong to W, his ward. W and G each maintain $10,000 individual accounts. What is the insurance coverage?

Answer: W's individual account and the guardianship account in G's name are added together and insured to $40,000 in the aggregate. The fact that a guardian has been judicially appointed does not alter the fact that the guardianship funds legally belong to W, the ward, and are insured as W's individually owned funds. (§ 564.3 (c)). G's individual account is separately insured. (§ 564.3(a)).

B. Testamentary accounts. The term "testamentary account" refers to a revocable trust account, tentative or "Totten" trust account, "payable-on-death" account or any similar account which evidences an intention that the funds shall pass on the death of the owner of the funds to a named beneficiary. If the beneficiary is a spouse, child or grandchild of the owner, the funds in all such accounts are insured for the owner up to $40,000 in the aggregate as to each such beneficiary, separately from any other individual accounts of the owner. If the beneficiary of such an account is other than a spouse, child or grandchild of the owner, the funds in the account are, for insurance purposes, added to any other individual accounts of the owner and insured up to $40,000 in the aggregate. In the case of s revocable trust account, the person who holds the power of revocation is deemed to be the owner of the funds in the account. If a revocable trust account is held in the name of a fiduciary other than the owner of the funds, any other accounts held by

the fiduciary are insured separately from such revocable trust account.

EXAMPLE 1

Question: H invests $80,000 in a revocable trust account with his son, S, and his daughter, D, as named beneficiaries. What is the insurance coverage?

Answer: Since S and D are children of H, the owner of the account, the funds are insured up to $40,000 as to each beneficiary. (§ 564.4(a)). Assuming that S and D have equal beneficial interests ($40,000 each), H is fully insured for this account.

EXAMPLE 2

Question: H, as settlor-trustee, creates a revocable trust for the benefit of his son, S. H creates a second revocable trust, with T as trustee, for the benefit of his nephew, N. H invests $40,000 of the funds of the first trust in a revocable trust account. T invests $20,000 of the funds of the second trust in another account. In addition, H, S, N, and Teach maintain individual accounts containing $40,000. What is the insurance coverage?

Answer: Since 8 is a child of H, the account established under the first trust is insured up to $40,000 separately from any other accounts held by H. (§ 564.4(a)). Since N is not a spouse, child or grandchild of H, the $20,000 in the account held by T under the second trust is deemed to be owned by H and is added to the $40,000 in H's individual account and insured up to $40,000 in the aggregate, leaving $20,000 uninsured. (§ 564.4 (b)). The individual accounts of S, N and T are separately insured to the $40,000 maximum. (§ 564.3(a)).

EXAMPLE 3

Question: H invests $40,000 in each of four "payable-on-death" accounts. Under the terms of each account contract, H has the right to withdraw any or all of the funds in the account at any time. Any funds remaining in the account at the time of H's death are to be paid to a named beneficiary. The respective beneficiaries of the four accounts are H's wife, his mother, his brother and his son. H also holds an individual account containing $40,000. What is the insurance coverage?

Answer: The accounts payable on death to H's wife and son are each separately insured to the $40,000 maximum. (§ 564.4(a)). The accounts payable to H's mother and brother are added to H's individual account and insured to $40,000 in the aggregate, leaving $40,000 uninsured. (§ 564.4(b)).

EXAMPLE 4

Question: H and W, husband and wife, each invest $80,000 in a revocable trust account with their son, S, and their daughter, D, named as equal beneficiaries. Under the terms of the trust, the interest of either grantor passes, on his death, to the surviv

ing grantor; upon the death of both grantors, the account is to be divided between S and D. Each of the grantors has the right to revoke the trust at any time. What, assuming S and D do not predecease their parents, is the insurance coverage if default occurs during the lifetime of both of the grantors? What is the insurance coverage if default occurs after the death of one but before the death of the other grantor?

Answer: Since S and D are the children of H and W, each of whom is the owner of one-half of the funds in the account, and since the account evidences an intention that the funds shall pass on the death of the owners of the funds to named beneficiaries, the funds are insured for each owner up to $40,000 as to each beneficiary. Thus, during their lifetimes, H and W are each insured up to $40,000 as to 8 and as to D, separately from any other individual accounts which they may own, making the account fully insured. If default occurs after the death of one of the grantors, insurance coverage of the account would decrease from $160,000 to $80,000, since the surviving grantor would have power of revocation over the trust and, under § 564.4, a grantor is entitled to insurance coverage only up to $40,000 as to each named beneficiary.

EXAMPLE 5

Question: H establishes a revocable trust account with his son, S, named as beneficiary. Under the terms of the trust, S becomes the owner of the account upon the happening of a certain event (for instance, coming of age) or upon the death of H whichever comes later. What is the insurance coverage?

Answer: During the lifetime of H the account would be insured up to $40,000 to H, the owner, as to S, the son, as a testamentary account, inasmuch as the account evidences an intention that, upon the death of the owner, ownership of the funds shall pass to the named beneficiary. If H dies prior to the happening of the event, the power of revocation dies with him and the account would be insured up to $40,000 to S, as the beneficiary of an irrevocable trust account established by H.

C. Accounts of executors or administrators. All funds belonging to a decedent and invested in one or more accounts, whether held in the name of the decedent or in the name of his executor or administrator, are added together and insured to the $40,000 maximum. Such funds are insured separately from the individual accounts of any of the beneficiaries of the estate or of the executor or administrator.

EXAMPLE 1

Question: A, administrator of D's estate, sells D's automobile and invests the proceeds of $5,000 in an account entitled: “A, Administrator of the estate of D." In the

same institution there is an account containing $40,000 which D had opened just prior to his death. What is the insurance coverage?

Answer: The two accounts are added together and insured up to the $40,000 maximum, leaving $5,000 uninsured. (§ 564.5). EXAMPLE 2

Question: X is executor of the will of T, under which A, B and C are beneficiaries in equal shares. X invests $80,000 of T's estate in an account entiled: "X, Executor of the will of T." A and X maintain individual accounts of $40,000 each in the same institution. What is the insurance coverage?

Answer: The account held by X as executor is insured only to $40,000. Such funds are considered the property of the decedent's estate and are not apportioned among the beneficiaries under the will. Since the title of the estate account discloses its fiduciary nature, X's individual account is insured separately. In addition, A's individual account is separately insured to the $40,000 maximum. (§ 564.5).

D. Accounts held by a corporation, partnership or unincorporated association. All funds invested in an account or accounts by a corporation, a partnership or an unincorporated association engaged in any independent activity are added together and insured to the $40,000 maximum. The term "independent activity" means any activity other than the one directed solely at increasing insurance coverage. If the corporation, partnership or unincorporated association is not engaged in an independent activity, any account held by the entity is insured as if owned by the persons owning or comprising the entity, and the imputed interest of each such person is added for insurance purposes to any inindividual account which he maintains.

EXAMPLE 1

Question: X Corporation maintains 8 $40,000 account. The stock of the corporation is owned by A, B, C, and D in equal shares. Each of these stockholders also maintains an individual account with the same institution. What is the insurance coverage?

Answer: Each of the accounts would be insured to $40,000 if the corporation is engaged in an independent activity and has not been established merely for the purpose of increasing insurance coverage. The same would be true if the business were operated as a bona fide partnership instead of as a corporation. (§ 564.6).

EXAMPLE 2

Question: A and B each has a $36,000 account in his own name and X Corporation has a $36,000 account. One third of the stock of X Corporation is owned by A and

two thirds by B. X Corporation was set up solely to obtain additional insurance. What is the insurance coverage?

Answer: Since X Corporation is not engaged in an independent activity, the funds in its account are insured as if owned by A and B in proportion to their inteerst in the corporation. For insurance purposes, $12,000 of the corporate account is imputed to A and added to his individual account and $24,000 is added to B's individual account. A has an aggregate individual interest of $48,000, if which $40,000 is insured, leaving $8,000 uninsured. Of B's total interest of $60,000, $20,000 is uninsured. (§ 564.6).

EXAMPLE 8

Question: C College maintains three separate accounts with the same institution under the titles: "General Operating Fund", "Teachers Salaries", and "Building Fund”. What is the insurance coverage?

Answer: Since all of the funds are the property of the college, the three accounts are added together and insured only to the $40,000 maximum. (§§ 564.6 and 564.7).

EXAMPLE 4

Question: The men's club of X Church carries on various social activities in addition to holding several fund raising campaigns for the church each year. The club is supported by membership dues. Both the club and X Church maintain accounts in the same institution. What is the insurance coverage?

Answer: The men's club is an unincorporated association engaged in an independent activity. If the club funds are, in fact, legally owned by the club itself and not the church, each account is separately insured to the $40,000 maximum. (§ 564.7).

EXAMPLE 5

Question: The PQR Union has three locals in a certain city. Each of the locals maintains a savings account containing funds belonging to the parent organization. All three accounts are in the same insured institution. What is the insurance coverage?

Answer: The three accounts are added together and insured up to the $40,000 maximum. (§ 564.7).

E. Public unit accounts. For insurance purposes, the official custodian of funds belonging to a public unit, rather than the public unit itself, is insured as the account holder. All funds belonging to a public unit and invested by the same custodian in an insured institution in the same state are added together and insured to the $100,000 maximum, regardless of the number of accounts involved. If there is more than one official custodian for the same public unit, the funds invested by each custodian are separately insured up to $100,000. If the same person

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