Credit Union National Association | CUNA€¦ · Web viewPower of Attorney -4-Guardian & Conservator -6-Estate Account -8-Club and Associations -10-Definition of a Trust, Trust

Special Relationship Accounts

Table of Contents:Representative Payee -2-Power of Attorney -4-Guardian & Conservator -6-Estate Account -8-Club and Associations -10-Definition of a Trust, Trust Roles -11-Trust Terminology -12-Trust Membership Requirements -13-Key Items, Opening a Revocable Trust Account -14-Trust Membership Card -16-Trust Credit Union Services -19-Trust NCUA Share Insurance -20-Closing Trust Accounts, Deceased Trustee(s) -21-Trust as Beneficiary -26-Trust Samples of Account Labeling -27-Trust Frequently Asked Questions -37-

Special Relationship Account Titles and OwnershipThe ownership and control of the account is established at the time an account is opened. The type of account determines how the account is titled, what identification and what documentation is required at account establishment. The documentation will establish the capacity and authority of the person opening the account. The type of account also determines the rights, obligations and liabilities of the parties to the account.

Definition of Special Accounts: Special Accounts all involve a Fiduciary Relationship

Definition of a Fiduciary Relationship: A Fiduciary relationship is one in which a person is authorized to manage and control property but does not have any ownership interest in the property.

1 Updated Nov. 2011I:/Manuals/Department Training Manuals/Loans_MS/Special Relationship Accounts


A Representative Payee is an individual appointed by the Social Security Administration to receive benefits on behalf of a beneficiary. Benefits are paid out for Social Security and/or SSI on behalf of someone who cannot manage or direct the management of his/her money. The Rep Payees first duty is to use the funds for the beneficiaries comfort and care. SSAs priority list goes as follows: food and shelter, medical and dental care not covered by insurance, for a child education and training, clothing and recreation.

A person must contact the SSA office nearest them to apply to be a payee; the payee is the only person allowed to access account funds. They must submit an application, requesting to be selected as payee, and documents to prove their identity. SSA requires that the payee application must be completed in a face-to-face interview (with certain exceptions). A POA is not recognized by Social Security for the purposes of handling benefit payments. The following lists the required duties of the payee:

Determine the beneficiary’s needs and use his or her payment to meet those needs; Save any money left after meeting the beneficiary’s current needs in an interest bearing account or savings

bonds for the beneficiary’s future needs; Report any changes or events which could affect the beneficiary’s eligibility for benefits or payment

amount; Keep records of all payments received and how they are spent and/or saved; Provide benefit information to social service agencies or medical facilities that serve the beneficiary; Help the beneficiary get medical treatment when necessary; Notify SSA of any changes in your (the payee’s) circumstances that would affect your performance or

continuing as payee; Complete written reports accounting for the use of funds; and Return any payments to which the beneficiary is not entitled to SSA.

NOTE: If the Rep Payee resides in the same household as the individual that is entitled to the money and is their parent or legal guardian a separate account is not required for the individual entitled to the funds. IF the Rep Payee is not the parent or legal guardian and/or does not reside in the same household a separate account must be opened for the individual entitled to the funds.

Representative PayeeThe funds on deposit are for the benefit of the Primary Name on the Account

Beneficiary – the person that is entitled to or who the money in the account belongs to. The Beneficiary cannot transact on the account including but not limited to: cash checks, withdraw funds, transfer funds and make changes to the account.

The Representative Payee is the only one able to Transact on the Account

Representative Payee (title in the Name Type field) – the authorized signer on the account. The Rep Payee is the only person who can manage the funds in the account or present the check from the Social Security Administration to be cashed; as long as the Beneficiary is still living. The Rep Payee cannot use the account for personal transactions.


Special Relationship AccountsRepresentative Payee

Legal Documentation Award Letter from Social Security Administration or copy of a paper check if not direct deposit (not a Petition Letter)

Account Type Individual Account

SS#/Tax ID Use the Beneficiary’s Social Security Number

Account Beneficiary The Estate of (Beneficiary Name)

Signature (Beneficiary Name) by (Rep Payee Name), Rep Payeeex: John Doe by Jane Doe, Rep Payee

(Rep Payee Name), Rep Payee for (Beneficiary Name)ex: Jane Doe, Rep Payee for John Doe

New Account Documentation Account Card (in the Account Designations section: (1) select the Other Box and type in Representative Payee Account)

Account Card signed by Representative Payee as stated above

Change Required Documentation

With a new Award Letter (not a Petition Letter) from the Social Security Administration or a copy of a paper check if not direct deposit; Account Change Card (in the Account Designations section: (1) select the Other Box and type in Representative Payee Account)

Account Change Card signed by Representative Payee as stated above.

In the event of Death of the Beneficiary:A death certificate for the Beneficiary is required. Add a comment to the account as follows: Beneficiary Name DECEASED 01.01.11 (actual date of death)

The responsibilities of the Rep Payee will cease and account will then be converted to an Estate Account with additional court documentation.

of the Representative Payee: A new Award Letter (not a Petition Letter) from the Social Security Administration naming the new Representative Payee.

Products & Services A Representative Payee account is eligible for a draft account; but not a debit card, VISA or loans. Checks would be ordered as follows: (Rep Payee Name)

Representative Payee for (Beneficiary Name)Address Information

ex: Jane Doe Representative Payee for John Doe102 Main St.Anywhere, USA 12345



A Power of Attorney (POA) is an individual who has legal authority to act on another person’s behalf. Power of Attorney authorizes a person to act on behalf of the owner of the account, allowing them the ability to do anything (unless stated differently in the POA documentation) the owner can do, including make withdrawals or closing the account. Power of Attorney ceases at the death of the individual who has granted authority for another to act on their behalf.

Executing a Power of Attorney does not mean that the member can no longer make decisions; it just means that another person can act for the member also. The member is simply sharing their power with someone else. The member can revoke the agents’ authority under the Power of Attorney at any time he/she becomes dissatisfied with what they are doing.

A Power of Attorney is authorized to only conduct business on an individual/joint account; not on a fiduciary account (Trust, Custodian, Guardian, etc) unless it is specifically permitted in the legal documentation.

Note: Military POA – It is common for an individual in active military service to authorize certain actions on his/her behalf. In most instances a “special” POA is used and provides very specific, but limited, powers. A typical Military POA will have a limited term of one year. The designated POA will have the expiration date placed in the name record and a comment will be placed on the account indicating the POA expiration date (ex: designated POA name expires on 00/00/0000).



Power of AttorneyThe Primary / Joint Member Names on the Account are the Account Owner(s)

The person authorizing another individual to transact on their behalfNote: If a Military POA the name record of the designated POA must be set to expire on the date authority stops and a comment must be placed (POA name stops on 00/00/0000).

Authorized Individual (aka Agent)

The named Power of Attorney (title in the Name Type field)NOTE: POA always ceases at death The POA cannot use the account for personal transactions.

Able to Transact on Account Member or Power of AttorneyLegal Documentation POA Designation – must authorize Power of Attorney over financial

transactions

Account Type Individual or Joint Account The Power of Attorney does not have rights to account proceeds in the event of death of the person they are Power of Attorney over

SS#/Tax ID Use the Primary Members

Account Beneficiary Is named by the account owners

Signature (Member authorizing POA)By (POA) as attorney in fact

ex: John Doe By Jane Doe as attorney in fact

New Account Documentation Account Card (in the Account Designations section: (1) select the Other Box and type in Power or Attorney followed by named individual)

Account Card signed by Member* and/or Power of Attorney as stated above


New Power of Attorney Designation; Account Change Card (in the Account Designations section: (1) select the Other Box and type in Representative Payee Account)

Account Change Card signed by Member* and/or Power of Attorney as stated above

In the event of Death Power of Attorney ceases at the death of the member who has granted authority for another to act on their behalf.

Products & Services No restrictions on products and services. A POA cannot initiate and sign for a VISA or lending if not specifically stated in the POA agreement.

*If possible you should get a notarized signature at a minimum; even if it consists of their ‘mark’



Guardian & ConservatorsGuardians & Conservators are individuals appointed by a court to assume responsibility for another person’s care and/or finances. A Ward (a minor child or adult) is the person under the care of a Guardian or Conservator.

Guardians are involuntarily appointed by the court; one person may be appointed to manage the Wards financial matters and another person may be appointed to manage medical decisions. Most Guardianships are established because of a developmental disability usually from birth.

Conservators are appointed upon the request of the Ward to manage their finances. Lending or pledging of shares must have special court approval. Most Conservators are established because of a physical/metal disability or due to old age.

Guardian & ConservatorThe funds on deposit are for the benefit of the Primary Name on the Account

Ward – the person that is entitled to or who the money in the account belongs to. The Ward cannot transact on the account including but not limited to: cash checks, withdraw funds, transfer funds and make changes to the account.

The Responsible Individual; the Guardian or Conservator is the only one able to Transact on the Account

Responsible Individual (title in the Name Type field) – the authorized signer on the account. The Guardian or Conservator is the only person who can manage the funds in the account; as long as the Ward is still living. The Guardian or Conservator cannot use the account for personal transactions.

Create a Comment at the Account Level to display every access as follows: (Guardian/Conservator Name), Guardian/Conservatorex: Jane Doe, Guardian

Legal Documentation Court Appointed Letter of Guardianship or Conservatorship (a Petition for Appointment of Guardianship or Conservatorship is not acceptable)

Account Type Individual Account

SS#/Tax ID Use the Ward’s Social Security Number

Account Beneficiary The Estate of the WardSignature (Ward Name) by (Guardian/Conservator Name), Guardian/Conservator

ex: John Doe by Jane Doe, Guardian

(Guardian/Conservator Name), Guardian/Conservator for (Ward Name)ex: Jane Doe, Guardian for John Doe


Special Relationship AccountsGuardian & Conservator

New Account Documentation Account Card (in the Account Designations section: (1) select the Other Box and type in Guardian/Conservator Account)

Account Card signed by Guardian/Conservator as stated above


With a new Court Appointed Letter of Guardianship or Conservatorship (not a Petition Letter); Account Change Card (in the Account Designations section: (1) select the Other Box and type in Guardian/Conservator Account)

Account Change Card signed by Guardian/Conservator as stated above

In the event of Death of the Ward:A death certificate for the Ward is required. Add a comment to the account as follows: Ward Name DECEASED 01.01.11 (actual date of death)

The responsibilities of the Guardian/Conservator will cease and account will then be converted to an Estate Account with additional court documentation.

of the Guardian/Conservator: A new Court Appointed Letter of Guardianship or Conservatorship (not a Petition Letter)

Products & Services A Guardian or Conservator account is eligible for a draft account; but not a debit card, VISA or loans. Checks would be ordered as follows: (Guardian/Conservator Name)

Guardian (Conservator for (Ward Name)Address Information

ex: Jane Doe Guardian for John Doe102 Main St.Anywhere, USA 12345



An Estate Account has a court appointed Executor/Personal Representative that administers and disperses a deceased member’s estate. A new account must be established using a Tax ID (www.irs.gov); you cannot just complete a W9 and add the information to an existing membership.

The Executor/Personal Rep will act on behalf of the deceased primary member and has authority over the funds on deposit. If there is a joint owner; the joint owner and the Executor/Personal Rep have equal rights to the funds on deposit. Once we are notified all funds that indicate Payable on Deposit (POD) to someone specific must be paid out to the named person(s). We will attempt to contact the listed account Beneficiary (ies) for funds to be paid out to the Executor/Personal Rep. If the Beneficiary (ies) object funds will be made payable to the Beneficiary (ies).



Estate AccountThe funds on deposit belonged to the deceased Primary Name on the Account

Deceased MemberAccount will be titled: Estate of (deceased individual name)

The Responsible Individual; the Executor is the only one able to Transact on the Account

Responsible Individual (title in the Name Type field) – the authorized signer on the account. The Executor/Personal Rep is the only person who can manage the funds in the account. The Executor/Personal Rep cannot use the account for personal transactions.

Create a Comment at the Account Level to display every access as follows: (Executor Name), Executorex: Jane Doe, Executor

Legal Documentation Death Certificate and A Court Order showing who has been appointed as Executor/Personal Rep

SS#/Tax ID Tax ID

Signature (Executor Name), Executor for the Estate of (Deceased Name)ex: Jane Doe, Executor for the Estate of John Doe

New Account Documentation Account Card (in the Account Designations section: (1) select the Other Box and type in Estate Account)

Account Card signed by Executor/Personal Rep as stated above


A new Court order; Account Change Card (in the Account Designations section: (1) select the Other Box and type in Estate Account)

Account Change Card signed by Executor/Personal Rep as stated above

Products & Services An Executor account is eligible for a draft account; but not a debit card or loans. Checks would be ordered as follows: (Executor Name)

Executor for the Estate of (Deceased Name)Address Information

ex: Jane Doe Executor for the Estate of John Doe102 Main St.Anywhere, USA 12345



A Club/Association is also known as an entity. An entity is something that has a distinct, separate existence; for example an organization, area chamber or volunteer association. The club/association elects officials, authorized signers, who are responsible for handling the financial matters for the club/association.

Clubs & Associations

The Primary Name on the Account is the club, or association

The entity that the funds on deposit belong to.

Authorized Signer(s) The named Authorized Signer(s) (title in the Name Type field) who are appointed to transact on behalf of the club or association. The Authorized Signer(s) cannot use the account for personal transactions.

Able to Transact on Account The Authorized Signer the account documentation will indicate the number of signers required for each transaction

Legal Documentation Tax ID issued in the club or associations name and a copy of the meeting minutes where officials were elected to represent the entity.

Account Type Organizational

SS#/Tax ID Tax ID assigned to the club or association

Account Beneficiary None, the account will continue with new Authorized Signers unless it is terminated.

Signature Authorized Signers will not use any specific format

New Account Documentation Account Card (in the Account Designations section: (1) select the Other Box and type in Club/Association and mark the box see Account Authorization Card) and complete the Authorization Designation Card (in the Form of Organization section mark the Association/Club box on the second page be sure to indicate the number of authorized signers needed to conduct transitions)

Account Card and Authorization Designation Card signed by Authorized Signers opening the account.


An Authorization Designation card signed by all elected officials along with the Meeting Minutes declaring newly elected officials.

Products & Services Eligible for most products and services unless the account must have two signers; see Loan and Service Pro Manager or Supervisor if a request is made. Checks would be ordered as follows: (Club or Association Name)

Address Information*Note: You do not have to identify the Authorized Signers*



A Trust is a legal entity that is able to own property and other assets. It is established by a legal agreement defining how assets are going to be managed and distributed. Property can legally be transferred into the trust and have the trust own it. Different trusts have different types of classifications in the law and for tax purposes. Trusts come in a variety of forms. The two major categories are Revocable Trusts and Irrevocable Trusts.

Revocable Trust: A Revocable Living Trust (also known as a Family Trust or Living Trust) is used primarily to avoid probate, reduce estate taxes, preserve your privacy and manage your financial affairs. A Revocable Living Trust is established while you are living. It is revocable, so you are able to make changes whenever you want, as well as reclaim the property transferred into it. It describes how your property should be managed while you are alive, and how it should be distributed upon your death. The successor trustee(s) the person(s) you appoint to handle the trust after your death simply transfer ownership to the beneficiaries you name in the trust. It is often called a Family Trust.

Avoiding Probate and Protecting Privacy with a Trust: Normally, if a person without a trust passes, there must be a probate process to determine how to distribute all of the property held solely in the deceased’s name. A will can help the probate court to determine where the property should go, but does not avoid the probate process. One primary purpose of probate is to validate the “last will” if one exists. Probate is a public procedure and opens up an estate’s distribution to the public’s eye. When you have correctly set up and used a Revocable Living Trust, upon your death there will be no probate process. This is because the owner of the property (the Trust) did not die; just the person in the role of the grantor (you) and most likely the trustee (usually you while you are alive).

Irrevocable Trust: An Irrevocable Trust is a trust that once established, cannot be revoked, terminated or changed in any way. This means that upon transferring assets into an irrevocable trust, the grantor can reserve no right to amend or abolish irrevocable trust proceeds. Furthermore, the grantor of an irrevocable trust is not permitted to make withdrawals from the trust principle. In some cases changes can be made to an irrevocable trust account upon consent of a beneficiary. PFCU will not establish Irrevocable Trust accounts.

NOTE: A trust never dies. All of the provisions of a trust are only effective at the time of death and do not have any effect on their account at PFCU while all the trustee(s) are living. When all the trustee(s) have passed the account does not have to be closed, the successor trustee(s) will manage the account and pay out to any beneficiary (ies) as stated in the trust. The information contained in the trust account is not our responsibility; the responsibility belongs to the trustee(s) and the parties drawing up the trust. If any information contained in the trust changes it is the trustee(s) responsibility to contact the credit union.

Trust Roles One person (the “grantor”) gives up property or “grants” property to another person (the “trustee”), who is “trusted” by the grantor. The trustee is trusted to take care of the property and use the property, not for himself, but for the “benefit” of a third person (the beneficiary). The terms “trustee” and “beneficiary” are standard in every trust. The term “grantor” is often times replaced by “settler”, “creator” or “trustor”. Often times, one person takes on more than one role in the trust. In a revocable living trust the same person will probably be the grantor, the trustee and the beneficiary all at the same time.

The trust document tells the trustee what he or she is suppose to do with the property, and the trustee is bound by law to follow the exact instructions given by the trust. The trustee is bound by a “fiduciary duty” to handle the property exactly as the trust directs.



Trust Terminology


TrusteeThe person(s) named by the

Trustor to manage trust assets. The

trustor may name himself as trustee

Beneficiary The named

person(s) named by the Trustor to

receive trust funds and property once the Trustor passes

Successor TrusteeThe person(s) who

succeeds the trustee(s) upon his death, resignation or inability to act

as the trustee

Trustor/GrantorThe individual(s)

who set up the trust converting

personal assets to trust assets

Revocable or Irrevocable

Trust

Special Relationship AccountsMembership Requirements

Credit unions can generally only serve members. Therefore, an individual or other entity (such as a trust) must become a member before it can receive services from the credit union. If a member wishes for a trust to receive services, such as being able to open a draft account, the trust must also become a member of the credit union. The people, not the trust its self must qualify for membership.

NOTE: Once all the original trustees of a Revocable Trust pass the trust becomes an Irrevocable Trust. PFCU will establish a new account for Revocable Trusts.

Federally Insured Credit Unions (PFCU): For a revocable trust to join a Michigan federally chartered credit union, it must either (1) be specifically be named in the credit union’s field of membership or (2) be an organization of such persons the credit union has elected to include in its field of membership. For federal credit union membership purposed, a trust qualifies as “an organization of such persons” if it is composed exclusively of such persons. Such persons: a trust is composed of its trustors, trustees and beneficiaries. Note NOT all of the persons must actually be members, but they must be eligible for membership.

State Insured Credit Unions: For a revocable trust to join a Michigan state chartered credit union, at least one of the parties to the trust must be a member.

NOTE: Credit union membership is not transferable and the trustor membership criteria must be met

Q. Can a trust have an account at the credit union?A. Yes, provided that it meets the eligibility requirements related to the trustors, trustees and beneficiaries.

Q. Can members retitle or transfer their accounts to a living trust?A. No. The membership requirements for credit unions state that member accounts cannot be retitled. This contrasts with banks, which can retitle accounts because they do not need to be concerned with membership and eligibility for service.

Q. Who can transact day to day business on a trust account?A. The named trustee(s) in the trust agreement are the only ones allowed to transact business. Successor trustee(s) transact business only when the original trustee(s) are no longer able to conduct business and the trust becomes irrevocable.

Q. Can a trust be named as beneficiary on an account?A. Yes. You should get the Certificate of Trust, Abstract of Trust, Memorandum of Trust or letter from the trustor(s) attorney which tells who the trustor(s), trustee(s), successor trustee(s) and beneficiary (ies) are, including the name of the trust and date the trust was established at the time of beneficiary designation to help facilitate in the death of the account owner(s). (how account is handled upon death of primary and/or all joint owners is found on page 21)


Special Relationship AccountsKey Items to Remember About Trust Accounts:

The credit union is not setting up the trust; we are only setting up an account to hold the funds belonging to the trust.

All trust accounts are individual accounts. The trust is the account owner (member), not the trustee(s). When setting up a trust account you will use the Living Trust Account Card not the standard

Membership Card. All trustee(s) labeled in the original trust agreement will have access to the account funds unless

an amendment to the original trust agreement is made changing the trustee(s). We cannot just remove a trustee.

If changes need to be made, it is recommended that a new Living Trust Account Card is completed.

The trust must obtain and use a TIN. A trust may be set up under the trustor(s) social security number only if: The same person is both the trustor(s) and trustee(s). OR The member and spouse are trustees, one (1) or both is a trustee and one (1) or both may revoke the trust.

What is needed to Open a Revocable Trust Account? Trust membership eligibility must be established with its own account number Certificate of Trust, Abstract of Trust, Memorandum of Trust or letter from the trustor(s) attorney

which tells who the trustor(s), trustee(s), and successor trustee(s) are, including the name of the trust, date the trust was established and how many trustees it takes to transact business. Do not take a copy of the original Trust agreement; a copy on file could possibly hold the credit union liable if non-permissible activity (ies) occur. If the trustor does not want the beneficiary (ies) listed on the membership agreement put “See Trust” where beneficiary (ies) is to be listed. The Certificate of Trust, Abstract of Trust, Memorandum of Trust or letter from attorney is to be scanned with the Living Trust Account Card (Membership Card) once complete.

OFAC the trustor(s), trustee(s) and beneficiary(ies) before account opening unless they are PRIMARY members on an established account

At the Account Level the Account Type will be Revocable Trust

For tax reporting purposes so not to cause a name & Social Security/Federal ID Number mismatch at the Name Prime:

If using a Social Security Number (example on page 27): 1. At the Name Prime level type in the first Trustees name (leave the title and suffix

fields blank). For example if Gerald J Spitzley is a Trustee: Gerald (first name field) J (middle name field) and Spitzley (last name field)

2. At the Name Prime level (mailing only, etc.) in the Extra Address field type in the name of the Trust so that it will print on all mailings to the member.

If using a Federal Tax ID (example on page 30): 1. At the Name Prime change the Name Format to Non Individual.2. In the Non Indiv Name field type in the Trust name. For example if it is the Janet

C. Fedewa Trust;in the Non Indiv Name field enter Janet C. Fedewa Trust. Make sure to change the SSN/TIN Type to Organization EIN.

Add all remaining trustees at the Account Level as Trustees; do not put them in the system as joint owners. Do not add successor trustee(s) to the system, the successor trustee(s) can not transact on the account until all trustee(s) are deceased, become incapacitated or relinquish the authority in a trust addendum.



If using a Social Security Number or a Federal Tax ID add one comment to the account: Comment: make the comment type display at every access and in the Comment field put

in the date the trust was established using all / no decimals or dashes Ex: U/D/A 01/06/08 (use 2 digits for month/date/year)

Give the trustee(s) a copy of the Living Trust Account Card and all disclosures

Q. Why do we need to list the beneficiaries on the Trust Membership Agreement?A. The benefit of having the beneficiaries listed on the trust card is for NCUA Share Insurance purposes. See page 20 for specifics regarding NCUA Share Insurance

Trust Abbreviations

Trust Words Abbreviation

under dated agreement U/D/A

Living L

Family F

Revocable R

Irrevocable (do not open new account that is Irrevocable) I

Testimonial T

Trust TrEx: L/R/Tr = Living Revocable Trust

Account Relationships

Relationship to Acct, not MemberTrustee Trustee TrustSCTRE Successor Trustee (after their last name) Trust

*only after all trustee(s) have passed are the successor trustee(s) put in the system


Special Relationship AccountsTrust Membership Card

Card FrontNOTE: Indicate somewhere on the card if the trust is Revocable or Irrevocable

Account Type: this section documents the account type(s) being established and the share ID assigned to each of the accounts.

Living Trust Membership: this section documents the information pertinent to the trust.◊ Member No: The base # for the trust without suffixes or letters that identify a specific account type◊ Account Title: The trust title according to the certificate of trust ◊ Input contact information for the trust: statement mailing address and phone number(s)◊ SSN/TIN: tax identification number of the dividend payee (NOTE: if a TIN is used the Trust cannot be

garnished) ◊ Password: Security word

Trustee Information: this section documents information pertinent to the trustee(s).◊ Trustee: the name of the trustee as designated by the trust agreement◊ Date of Birth: birth date of trustee◊ Eligibility for Membership: trustee’s membership eligibility◊ SSN: trustee Social Security number◊ Driver’s Lic. No.: drivers license number of the trustee


Special Relationship Accounts Grantor Information: this section documents information pertinent to the grantor(s)/trustor(s). Document the name of the trustor(s) and indicate if the trustor(s) are the same as the trustee(s). If the trustor(s) are different than the trustee(s), then document the membership eligibility of the trustor(s).

Successor Trustee(s): if there are successor trustee(s) indicate names in this section

Beneficiary Information: If the beneficiary (ies) have been named for the account, provide the appropriate information in this section including the relationship to the trustor(s) for NCUA share insurance purposes. For a revocable trust membership eligibility does not have to be established for the beneficiary (ies).

Account Services: complete this section based on the additional services the trustee(s) elect


Special Relationship AccountsCard Back

TIN Certification and Backup Withholding Information: This certification is drafted to confirm that the dividend payee is subject to backup withholding unless otherwise indicated. If the trust is not subject to backup withholding, nothing in the section should be marked. If the trust has received notification that it is subject to backup withholding, the trustee should cross off item 2b.

Trustee Certifications: the trustee(s) certify that they are authorized by the trust agreement to establish accounts and conduct transactions on behalf of the trust. The trustee(s) also certify that any one (1) trustee will act in a fiduciary capacity for all trustees. When they sign in the “Agreement and Authorization” section, the trustees are certifying that this section is true and accurate.

Agreement and Authorization: this section indemnifies the credit union and acknowledges receipt, by the trustee(s) of the required account disclosures. By signing the section, the trustee(s) are agreeing to everything mentioned. Prior to signing the document, they must receive a membership agreement, Truth-in-Savings Disclosure, Privacy Notice Disclosure and all other applicable disclosures based on services provided at the time of account opening.

Trustee Signature/Date: the trustee(s) will sign in this space and fill in the current date.

For Credit Union Use Only: the member service representative will initial in the Opened/App’d by section, date in the Date of Membership section and in the Member Verification section the member service representative will indicate OFACed


Special Relationship AccountsCredit Union Services

Credit union services offered to a trust are identical to those offered to a non-trust account with the following exceptions:

ATM/Debit Cards: If the trust document stipulates that “All trustees must sign for withdrawals” than ATM/Debit card privileges’ are not permissible. If a card is issued the credit union would be taking on additional risk and would have a difficult time holding the trustee(s) accountable for problems that result from the trust transacting business via an ATM/Debit card. If the trust does permit withdrawals without a signature have the trustee(s) sign the application indicating so.

Finance Central: Trust accounts will be able to have finance central. If the trust document stipulates that “All trustees must sign for withdrawals” than Finance Central and Bill Central privileges’ are not permissible.

IRAs: Trusts are not permitted to own IRAs. An IRA can only be owned by a person. It is permissible for the trust to be the beneficiary of an IRA

Lending: The trust agreement should clearly indicate who must authorize borrowing activity and has the ability to pledge assets; the trustee will provide us with the information to review, but do not keep a copy. The power to “borrow” does not automatically include the power to “guarantee” or to pledge assets to debts owed by or incurred for the benefit of another. It will be best practice of PFCU loan officers to issue loans to members with a trust account on a personal membership basis. If the trustee(s) want the loan issued under the trust account documentation provided must be reviewed by the Loan Manager, Assistant Loan Manager, CEO, Executive VP or Compliance Officer before the loan is approved and issued. If a loan is issued under a trust account the trustee(s) will sign for the loan and then personally guarantee the loan.For example: John Doe, trustee for the Doe Revocable Living Trust John Doe The Trustee must Guarantee the loan (make sure to add the name pledge), print and complete the Guarantee Agreement form. If security is being used verify that the security is in the Trust or owned personally by the member. If owned personally the member must sign as owner of the collateral.

NCUA Share Insurance: see the next page Safety Deposit Boxes: Are allowed to be issued under a trust account if the trust document

contains the appropriate authority to enter into a safe deposit box contract. Share Certificate: There is not a problem permitting a trust to own a share certificate or CD. The

share certificate will simply reflect the name of the trust as owner. A trust CD cannot have a beneficiary listed on it; the beneficiary is identical to the one listed in the Trust Documentation. For example: John Doe Revocable Trust Dated (date trust was signed)Include the trusts social security number or Tax ID# for positive identification of the trust the certificate belongs to on the share certificate

Share Draft: There may be an issue of the trusts name being printed on the drafts instead to the name of the trustee(s) may cause a problem of acceptance for personal debt payment. Have the member sign the draft order form indicating to imprint the drafts with the names trustee(s).

The PLAN: A trust account cannot have a PLAN


Special Relationship AccountsNCUA Share Insurance

The NCUSIF (National Credit Union Share Insurance Fund) provides separate coverage for both revocable and irrevocable trusts.

Revocable Trust Accounts: May qualify for insurance coverage of up to $250,000* per beneficiary named by the owner that is separate from the individual coverage available to the trust owner. For example, if a person with a revocable trust for $300,000 names a spouse and two children as beneficiaries, the entire $300,000 would have separate NCUSIF coverage ($250,000* per beneficiary). This coverage is separate from the coverage provided to other types of accounts held by the trust’s owner at the same federally insured credit union.

Two basic documentation standards must be followed in order for revocable trust accounts to be separately insured:**

1. The account title must clearly indicate that the owner intends to create a revocable trust. The words “in trust for” (ITF) or “pay upon death” (POD) or some similar designation must be included in the account title.

2. The trust signature card or some other record within the institution must indicate who the beneficiary (ies) are so they can be identified. If possible record an address and relationship to the owner.

Irrevocable Trust Accounts: Funds placed in an account by a trustee under an irrevocable trust have separate coverage based on the beneficial interest under such trust. The interest of each beneficiary in an account(s) established as an irrevocable trust has separate NCUSIF coverage of $250,000*. In cases where a beneficiary has an interest in more than one trust arrangement created by the same owner, the interests of the beneficiary in all accounts established under such trusts are added together for insurance purposes and insured for a total of $250,000* that is separate from and in addition to the coverage the NCUSIF provides other types of accounts.

NCUA Share Insurance Estimator: NCUA has a Share Insurance Estimator on its website to help members better understand the protection offered by the NCUSIF. This interactive site allows users to input hypothetical data to compute the amount of NCUSIF coverage available under different account structure scenarios. This resource is available at the link http://webapps.ncua.gov/ins/.

*Permanent increase from $100,000 due to the passage of the Emergency Economic Stabilization Act of 2008 released October 3, 2008; protection is increased on all types of accounts in 2009.

**Effective October 3, 2008 the NCUA Board adopted changes to simplify coverage available on living trust accounts. Applying to existing and future revocable trust accounts at all federally insured credit unions, the rule change eliminates the concept of qualifying beneficiaries, coverage is based on the naming of virtually any beneficiary. Previously beneficiaries had to qualify as immediate family; each beneficiary was to be the owner’s spouse, child, grandchild, parent or sibling to qualify for NCUA Share Insurance coverage.


http://webapps.ncua.gov/ins/

Special Relationship AccountsTrust Account Closing Procedures

A trustee(s) can close an account at any time.

Closing the Entire Account or a Suffix(s) If there is more than one signature required for withdrawals all required signatures are

mandatory for account closing. If there are any loans issued under the account they must be paid-in-full or the 0001 share ID

must remain open with a minimum of $5 If there was payroll being direct deposited make sure it has stopped coming in before the account

is closed. If it continues to be directed to this account once the account is closed it will be returned to the payroll company ‘account closed’

If automatic transfers or ACH transactions are deducted from the account make sure they have stopped or they will be returned ‘account closed’ causing possible fees for the member. Some insurances come out once a year or quarterly as a courtesy check the history

Before a draft account is closed make sure all drafts have cleared and there are no more transactions scheduled to debit or credit to the account. Drafts that come in after the account is closed will be returned. Complete a Voluntary Draft Closing Notice and save in Imaging with the draft account agreement

If the account is closed all CDs must be payed out subject to penalties ATM or Debit Card: complete a Plastic Change Card and place in Imaging VISA: contact the VISA department to make sure the balance is zero or to find out the balance

payoff and complete a Plastic Change Card and place in Imaging. Finance Central: under the Preference Record in the account tree remove the HB User Name

and HB Password fields e*Statements &/or Bill Central: contact the IT Dept Close the account in the system making sure to put in the reason why the account was

closed (moved from area, needed funds, etcetera). The Marketing Dept tracks monthly why accounts are closed and reports the findings to the Board of Directors.

How is the account handled when the Trustee(s) are deceased?

Upon the death of the trustee(s), the assets in the trust will be controlled by the successor trustee(s). The successor trustee(s) have the responsibility of disbursing the trust assets to the named beneficiary (ies) and performing any other duties identified in the trust agreement or specified by law.

The main concern of the credit union is that the funds in the account are paid to the true successor trustee(s). The identity of any person claiming to be the successor trustee(s) must be verified. In addition, the death certificate that the successor trustee(s) present must also be verified.

Tellers that are approached by individuals claiming to be the successor trustee(s) of a member’s revocable trust should immediately contact the Loans/Member Service Manager or Loans/Member Service Assistant Manager. The Manager or Assistant Manager can then proceed with verification procedures, which may involve contacting the member’s attorney, the credit union’s attorney, or both.


Special Relationship AccountsThe following items summarize the procedure to follow before paying out funds to any person(s) claiming to be the successor trustee(s):

1. Employee contacts Loan/Member Service Manager or Assistant Manager to alert him/her to the claim of the successor trustee(s)

2. Manager or Assistant Manager will look up the file on Imaging3. Manager or Assistant Manager matches the name(s) of the person(s) claiming to the successor

trustee(s) to the name(s) that appears on the trust document, certification of trust, memorandum of trust, abstract of trust or letter from the attorney.

4. If name(s) match the Manager or Assistant Manager will verify that the identification of the successor trustee(s) is valid NOTE: If the name does not match, the Manager or Assistant Manager is advised to contact the attorney listed on the Certificate of Trust or letter as well as the credit union’s attorney. Proceed upon the advice of contacted counsel. It is recommended that the credit union obtain the counsel’s instructions in writing.

5. The Manager or Assistant Manager verifies the validity of the death certificate presented.6. If the trust is to be closed move to step 7, closing procedures can be found on page 23. If the trust

will remain open and after the successor trustee(s) is identified the following steps will occur:

If the Trust has a Social Security Number: The successor trustee(s) will get a Federal Tax ID if the account was not established with

one. (www.irs.gov) OFAC all successor trustee(s) if they are not a PRIMARY member on an established

account at PFCU. If the deceased Trustees name is located at the Name Prime level duplicate and place at

the secondary level as a Trustee; place a Death Date and Expiration Date in the Name Record.

In the Name Prime field change the Name Format to Non Individual and enter the name of the Trust in the Non Indiv Name field. Change the Social Security Number to the Federal Tax ID number and change the SSN/TIN Type to Organization EIN.

Add the successor trustee(s) placing the abbreviation SCTRE after their last name in the last name field and change the Name Type to Trustee.

Complete a new Living Trust Account Card.

If the Trust has a Federal Tax ID: OFAC all successor trustee(s) if they are not a PRIMARY member on an established

account at PFCU. Place a Death Date and Expiration Date in the deceased Trustees Name Record. Add the successor trustee(s) placing the abbreviation SCTRE after their last name in the

last name field and change the Name Type to Trustee. Complete a new Living Trust Account Card.

7. The Manager or Assistant Manager authorizes the pay out of funds.

NOTE: Trusts holding large sums of money may be reviewed by the credit unions attorney before funds are paid out. There is no specific dollar amount determined by PFCU that must be reviewed by the credit unions attorney we will determine on a case-by-case basis.

The above stated steps do not have to be completed on the same day. The credit union may need time to verify the death certificate presented, as well as other items. Payout of funds from the trust account does not have to be immediate; the account can remain open until all matters concerning the trust are resolved.


Special Relationship AccountsRecord Retention: Upon paying out the funds from a trust account, the credit union must retain the records used to establish the account for an indefinite time period. It is important for the records to be kept in case the credit union is sued or challenged for distributing trust proceeds improperly. It is recommended that the Living Trust Account card, Certification of Trust or attorney’s letter used to establish the account and any other related information be stored in a reliable source.

Q. Does the name of the trust change upon the death of all trustee(s)?A. No. The trust remains the same entity that it was before the passing of the trustee(s). The only change is that it is the successor trustee(s) responsibility to manage and pay out all funds to the beneficiary (ies).

Deceased Trustee Procedures

NOTE: The name of the trust never changes

NOTE: If the deceased trustee has a separate account w/ IRA funds where the trust is the beneficiary payout IRA funds to the trust account

Primary or Joint Trustee Deceased If the deceased Trustee is the Primary member add their information as a secondary record. (only if

using Social Security Numbers) Within the deceased Trustees Name Record input the Death Date and an Expiration Date.(if using

Social Security Number or Tax ID Number) The remaining trustees name will be placed in the Name Prime Record in the system with their

social security number so the taxpayer identification number matches for tax reporting purposes. (only if using Social Security Numbers)

Scan a copy of the death certificate into Imaging If the member was requested to bring in a Certified copy of the death certificate forward it to

collections for claim processing If there are loans with life insurance collections will process the claim If the deceased was a recipient of Social Security and passed before the end of the month their next

Social Security payment will be debited back out of the account and re-credited with a prorated payment

If the deceased has bonds with a beneficiary listed, the beneficiary can redeem with a copy of the death certificate. The beneficiary will sign their name with POD after (payable upon death) ex: Joe Member POD

Close the deceased trustees ATM or Debit Card Close the deceased trustees VISA Check all accounts that the deceased trustee as joint on to make sure there name will no longer print

on monthly statements.

All Trustees Deceased – Account Remaining Open The Successor Trustees must apply for a Federal Tax ID (www.irs.gov) if the account will not be

paid out by the end of the year. Complete a W9 form having the successor trustee sign and update the system with the Tax ID number changing the SSN/TIN Type to Organization EIN.

Duplicate a Name Record for the deceased Trustee. Within the deceased Trustees Name Record input the Death date and an Expiration Date.


Special Relationship AccountsIn the Name Prime Field change the Name Format to Non Individual and place the Trust Name in the Non Indiv Name field in the system so the Taxpayer ID matches the name. When we receive a copy of the death certificate scan into Imaging Follow step 6 on page 22 to add successor trustee(s) to the account If the member was requested to bring in a Certified copy of the death certificate forward it to

collections for claim processing If there are loans with life insurance collections will process the claim Collections will check for Life Savings insurance on the account If the deceased was a recipient of Social Security and passed before the end of the month their next


If automatic transfers or ACH transactions will continue notify successor trustees of current payments debiting account. Look for yearly and quarterly debits also

Before the draft account is closed make sure all drafts have cleared and there are no more transactions scheduled to debit or credit to the account

Any CDs on the deceased Trust account will remain opened unless the account will be closed. CDs will be redeemed without penalty

If the deceased has bonds with a beneficiary listed, the beneficiary can redeem with a copy of the death certificate. The beneficiary will sign their name with POD after (payable upon death) ex: Joe Member POD

Close the deceased trustees ATM or Debit Card Close the deceased trustees VISA If the successor trustee will use Finance Central set up or reset the HB Password so they can access If the account has Bill Central contact IT to close If the successor trustee will use LUCY reset to change the PIN Check all accounts that the deceased member was joint on to make sure there name will no longer

print on monthly statements. Update the address, phone number and additional information of the successor trustee who will be

receiving all account information. Update the e-mail address if receiving e*statements. Sign up for e*statements if prefers.

All Trustees Deceased – Account Closing Within the deceased Trustees Name Record input the Death Date; only add an Expiration Date if it is

not the Primary Name Record When we receive a copy of the death certificate scan into Imaging Follow step 6 on page 22 to add successor trustee(s) to the account if necessary until the account is

closed The Successor Trustees must apply for a Federal Tax ID (www.irs.gov) if the account will not be

paid out by the end of the year. Complete a W9 form having the successor trustee sign and update the system with the Tax ID number changing the SSN/TIN Type to Organization EIN. Duplicate a Name Record for the deceased Trustee. Within the deceased Trustees Name Record input the Death date and an Expiration Date. In the Name Prime Field change the Name Format to Non Individual and place the Trust Name in the Non Indiv Name field in the system so the Taxpayer ID matches the name.

If the member was requested to bring in a Certified copy of the death certificate forward it to collections for claim processing

If there are loans with life insurance collections will process the claim Collections will check for Life Savings insurance on the account If the deceased was a recipient of Social Security and passed before the end of the month their next



Special Relationship Accounts If automatic transfers or ACH transactions notify successor trustee of what is coming out so they

can stop. Look for yearly and quarterly debits also Before the draft account is closed make sure all drafts have cleared and there are no more

transactions scheduled to debit or credit to the account Any CDs on the deceased Trust account will be redeemed without penalty If the deceased has bonds with a beneficiary listed, the beneficiary can redeem with a copy of the

death certificate. The beneficiary will sign their name with POD after (payable upon death) ex: Joe Member POD

Close the deceased trustees ATM or Debit Card Close the deceased trustees VISA Finance Central: under the Preference Record in the account tree remove the HB User Name and HB

Password fields If the account has Bill Central contact IT to close Check all accounts that the deceased member was joint on to make sure there name will no longer

print on monthly statements. Update the address, phone number and additional information of the successor trustee who will be

receiving all account information. Update the e-mail address if receiving e*statements. Sign up for e*statements if prefers.


Special Relationship AccountsHow is an account handled that names a Trust as the beneficiary?

If the remaining member is:a) The primary member: Follow normal member service procedures for removing a joint owner.

Procedures can be found in the Member Services Manual. The primary member can continue with current account unless they would like to open a trust account then follow procedures to open. If we do not have a Certificate of Trust, Memorandum of Trust, Abstract of Trust or letter from the attorney on file which tells who the trustor(s), trustee(s), successor trustee(s) and beneficiary (ies) are, including the name of the trust, date the trust was established and how many trustees it takes to transact business get a copy and scan with current or newly established membership information.

b) The joint member: follow normal member service procedures that are found in the Member Services Manual. The remaining joint owner can establish a new account in their primary name, open an account in the trust name and/or move assets to an account they are primary on.

All owners deceased:a) If we do not have a Certificate of Trust, Memorandum of Trust, Abstract of Trust or letter from

the attorney on file which tells who the trustor(s), trustee(s), successor trustee(s) and beneficiary (ies) are, including the name of the trust, date the trust was established and how many trustees it takes to transact business get a copy and scan with current membership information.

b) If any remaining joint owners are on the account funds will be paid out directly to them; unless they remove themselves so that the Trust will become the account Beneficiary then the funds will become property of the Trust.

c) If there are not any remaining joint owners funds will be paid out to the name of the Trust follow procedures on page 23.

d) If the successor trustee(s) want to establish a Trust account at PFCU follow the new Trust account procedures as established on page. A Federal Tax ID number must be issued before the trust account is established. (www.irs.gov)


Special Relationship Accounts Frequently Asked Questions

Q. Can joint owners be added to a trust account?A. No. The only people authorized to transact business on a trust account are those listed in the Trust. While living that would be the trustee(s) and upon death of the trustee(s) it would be the successor trustee(s).

Q. Can a trust be a joint owner on an account?A. No. Depending on the specific facts of the situation (including the state the member lives in at the time of death), it could create problems with determining when the trust actually became the owner of the funds. If it’s determined the trust really only gained rights at death, there may be legal consequences. This could land the matter in Probate Court, and the credit union might end up being held responsible for creating a variety of problems. The trust would not be actively using the account while the other party is still alive, so using joint ownership will serve no useful purpose. The likely goal can be much better achieved by designating the trust as the beneficiary of the account.

Q. What if a person comes into the credit union showing documents that (s)he held power of attorney for a member who is a trustee on a credit union account owned by a trust. Can the person holding the power of attorney make decisions regarding the trust?A. No. A trustee cannot authorize someone else to act on behalf of the trust unless the trust document specifically provide for such a power. Such a power would be exercised by a document relating to the trust, such as an amendment or a designation by the trustor(s) of additional trustee(s) that references the trust. In no event would the document used be titled as “power of attorney” and in no event could such a document be used if it does not make specific reference to the trust. Q. A member wants to transfer money from a business account to an account owned by a trust. Is this allowed?A. A business should never be allowed to transfer money to an account at the credit union that isn’t owned by the same business. If a business issues a check payable to a trust, that check can be accepted like any other check payable to the trust. The use of an instrument is needed to ensure a clear separation of the identities of the two parties involved should litigation arise concerning either party (or the IRS conduct an audit) in the future.

Q. Can a trust account be closed?A. Yes. There are no transactional limitations; the trust account can be closed at any point by authorized trustee(s) or successor trustee(s) if all the trustee(s) have passed.

Q. If you are living why would you establish an irrevocable trust?A. An irrevocable trust is a separate legal entity that pays its own taxes, has its own tax return and may decrease an individual’s tax bracket. An irrevocable trust is usually established when a person is extremely wealthy. Funds in an irrevocable trust cannot be part of a law suit, have a lien placed against them, be garnished, etcetera.

Q. Who will pay the funds to the beneficiary(ies) when all trustees pass?A. The credit union will not payout funds to the beneficiary(ies); the trust will then be managed by the successor trustee(s) who will disperse all assets according to the Trust.


Special Relationship AccountsQ. How should the credit union handle a check payable to a trust that is presented to the credit union? What if the name doesn’t exactly match the name we have on our account records?A. Like any negotiable instrument made payable to a non-natural person, the credit union should require the instrument to be deposited in full and not cashed. A separate instrument should be used for a withdrawal if the trustee wants to receive cash back. The credit union should insist on a exact match between the name of the payee as shown on the negotiable instrument and the name on the account. If there are any discrepancies or anything about the check the credit union doesn’t understand, it should decline to accept the item and suggest that the presenter have the check reissued with a payee name that exactly matches the credit union records. Since many trusts have similar names, the credit union may want to require that such a check, particularly if it is for a large amount, contain some sort of unique identifier (such as a TIN) in addition to an exact name match.

Q. What if the question arises concerning specific features of the trust?A. Depending on the circumstances a credit union may want to contact the attorney who drafted the trust for written information or may want to get an opinion from its own attorney. The more money that is involved, the more important it is that the credit union speak with its own attorney. Advice is most likely to be needed when one of the trustors pass.

Resources: CUNA Mutual Special Account Relationships Training & Job Aid www.bankersonline.com representativepayee.com www.franklincountyohio.gov/probate/departments/guardianship

Trust Resources: MCUL Revocable Trust training package CUNA Mutual Group Deposit Account Documents referring to Living Trust Account Card Wolters Kluwer compliance article (www.complianceheadquarters.com/ComplianceArticles/Deposit_072508.aspx) CUNA & Affiliates Basic Trust & Advanced Trust webinars (2008)


http://www.complianceheadquarters.com/ComplianceArticles/Deposit_072508.aspx

http://www.franklincountyohio.gov/probate/departments/guardianship

http://www.bankersonline.com/