08/05/2026
Industry News
The National Credit Union Administration (NCUA) has issued a final rule amending the share insurance coverage calculation rules for trust accounts under 12 CFR Part 745. The rule is effective December 1, 2026.
Current Calculation Coverage
Under current Part 745, revocable and irrevocable trust accounts are insured separately.
An irrevocable trust is one in which the grantor(s) contribute money and/or property to the trust via written agreement and give up all rights to change or cancel the trust. To calculate coverage today, all irrevocable trust accounts established at the same credit union by the same grantor are added together and insured up to $250,000 for each named beneficiary. To qualify for coverage, the grantor and all beneficiaries must be members of the credit union. Coverdell Education Savings Accounts, formerly education IRAs, are insured as irrevocable trust accounts.
There are two types of revocable trust accounts; formal and informal. A formal revocable trust is one in which the grantor(s) contribute money and/or property to the trust via written agreement and reserve the right to change or cancel the trust. An informal revocable trust is an account with a payable on death (POD) designation, where the account balance will automatically transfer to the named beneficiary upon the account holder’s death. Coverage is currently calculated as follows:
- 5 or fewer beneficiaries – up to $250,000 for each named beneficiary
- 6 or more beneficiaries – the greater of:
- Each beneficiary’s actual interest in the trust (up to a maximum of $250,000 per beneficiary), or
- $1,250,000.
New Calculation Coverage
Under the new rule, after December 1st all trust account types (e.g., irrevocable, formal revocable, informal revocable) will be consolidated into one category and each account owner’s trust share will be insured up to $250,000 per named beneficiary, with coverage capped at $1,250,000.
To better understand the simplification under the new rule, let’s look at a couple of examples.
Individual Grantor
John Doe, individually, has a trust account with four (4) named beneficiaries. The account has a balance of $2,000,000. With coverage of $250,000 per beneficiary, the account is insured for $1,000,000. As a result, $1,000,000 of the account balance is UNINSURED.
Multiple Grantors
John and Jane Doe, jointly, have a trust account with four (4) named beneficiaries. The account has a balance of $2,000,000. John has coverage in his name of $250,000 per beneficiary for a total of $1,000,000 in coverage. Jane also has coverage in her name of $250,000 per beneficiary for a total of $1,000,000 in coverage. As a result, the account is FULLY INSURED for $2,000,000.
Credit unions that have members with both irrevocable and revocable trust accounts should check the current balances to determine adequate share insurance coverage. With trust account coverage being combined under the new rule, beginning December 1st, there may be members who now have accounts that are uninsured or underinsured. You may want to consider reaching out to these members to help them explore their options.