Substitute Senate Bill No. 1066

Public Act No. 01-6

AN ACT CONCERNING DEPOSITS IN TRUST AT CREDIT UNIONS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-296 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) (1) No bank, Connecticut credit union, or federal credit union shall establish any deposit or share account in which deposits or shares are to be held by one natural person in trust for another natural person unless the depositor provides the bank, Connecticut credit union, or federal credit union with the name and a residential address for the beneficiary, upon establishing the deposit or share account or thereafter at the request of the bank, Connecticut credit union, or federal credit union. The depositor may also provide the bank, Connecticut credit union, or federal credit union with a writing signed by the depositor specifying the terms of the trust under which such deposit or share account is to be held. Unless such writing specifies to the contrary, it shall be conclusively presumed that the depositor intends to create a trust of all funds credited to the deposit or share account from time to time upon the following terms: (A) The depositor during [his] the depositor's life may withdraw, or authorize charges against, such funds; (B) if the depositor survives the named beneficiary, the named beneficiary's death shall terminate the trust and title to the deposit or share account shall thereupon vest in the depositor free and clear of the trust; (C) if the named beneficiary survives the depositor, the depositor's death shall terminate the trust and title to the deposit account or share account, subject to any membership restrictions for Connecticut credit unions or federal credit unions, shall thereupon vest in the named beneficiary free and clear of the trust. (2) Any bank, Connecticut credit union, or federal credit union shall be fully protected in making payment of any moneys credited to such deposit or share account in accordance with the terms of such signed writing or, in the event such writing does not specify to the contrary, in accordance with the presumptions contained in this subsection that are applicable, and the title of any person to any moneys credited to such deposit or share account and the effect of such signed writing with respect to the deposit or share account or, in the event such writing does not specify to the contrary, the effect of the presumptions contained in this subsection shall not be denied, abridged or in any way affected because such signed writing was not executed in accordance with, or otherwise fails to comply with, the laws of this state prescribing the requirements to effect a valid testamentary disposition of property or because of any absence of delivery or compliance with other requirements to effect a valid gift or transfer in trust. (3) The provisions of this subsection do not apply to deposit or share accounts accompanied by a writing of the type described in subsection (b) of this section or to any deposit or share account opened primarily for business or professional purposes, including, but not limited to, escrow accounts, trust accounts and clients' funds accounts.

(b) In the case of a deposit or share account established or maintained with a bank, Connecticut credit union, or federal credit union by a trustee under a will or trust agreement or under the terms of some other written document, or by a trustee pursuant to statute or order of a court, the trustee shall provide the bank, Connecticut credit union, or federal credit union with a writing identifying such will, agreement, other written document, statute or order; and any moneys credited to a deposit or share account with respect to which the trustee has filed such a writing shall be paid only to or upon the order of such trustee or of the successor trustee. If the trustee is serving in such capacity under a will, trust agreement or other written document, a certified copy of such document shall be filed by the depositor if at any time requested by the bank, Connecticut credit union, or federal credit union but such bank, Connecticut credit union, or federal credit union shall not be charged with notice, actual or constructive, of the contents of such will, trust agreement, or other written document. Such bank, Connecticut credit union, or federal credit union shall be fully protected in paying over any moneys credited to such deposit or share account to or upon the order of the trustee establishing or maintaining the deposit or share account or the successor trustee and shall be under no duty to inquire into the application of funds so paid.

(c) (1) Subsection (a) of this section applies to all deposit accounts governed by its provisions established [(1)] (A) on or after June 13, 1963, and [(2)] (B) prior to that date if the depositor when establishing such deposit account or at any time thereafter provides a writing meeting the requirements of subsection (a) of this section. Subsection (b) of this section applies to all deposit accounts governed by its provisions whether such deposit accounts were established prior to June 13, 1963, or are established on or after that date.

(2) Subsection (a) of this section applies to all share accounts governed by its provisions which are established at Connecticut credit unions and federal credit unions (A) on or after October 1, 2001, and (B) prior to that date if the depositor when establishing such share account or at any time thereafter provides a writing meeting the requirements of subsection (a) of this section. Subsection (b) of this section applies to all share accounts governed by its provisions whether such share accounts were established prior to October 1, 2001, or are established on or after that date.

Sec. 2. Section 36a-446 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The capital of a Connecticut credit union shall consist of the net payments on shares made to it by its members.

(b) The par value of shares shall be five dollars or any multiple thereof, except that any Connecticut credit union in existence on May 23, 1969, having a par value of shares other than as set forth in this subsection shall not be required to change such par value by virtue of the requirements of this subsection.

(c) Payments on shares including membership shares or parts of shares may be received at any time. Payments on shares and parts of shares with the exception of membership shares may be withdrawn in accordance with the bylaws and in accordance with the Deposit Account Contract Act except that the governing board may require members to give sixty days' notice of intention to withdraw the whole or any part of their shares or payments on shares.

(d) When a share account in a Connecticut credit union has been established by or in the name of a minor or in the name of two persons, one or both of whom are minors, and payable to either or to the survivor, the share account shall be held for the exclusive right and benefit, including the privilege of pledge or assignment, of such minor or minors, and shall be free from the control or lien of all other persons except creditors. The share account shall be paid, together with dividends or interest thereon, to the person or persons in whose name the share account is held. The receipt of the person paid shall be a sufficient and valid release to such credit union for such share account or any part thereof.

[(e) No Connecticut credit union may issue shares to or receive payments on shares from one person in trust for another unless accompanied by a statement signed by the member giving the name and residence of the beneficiary and setting forth to whom the principal and interest or dividends on such shares belong. Unless provision is made to the contrary in such statement, the shares may, on the death of the trustee, be paid to the beneficiary and the Connecticut credit union shall be fully protected in making the payment. In the case of a trust created by deed, will or other instrument, a certified copy of the instrument establishing the trust shall be filed by the member if at any time requested by the Connecticut credit union.]

[(f)] (e) A Connecticut credit union may, with the written approval of the commissioner and subject to applicable restrictions of state and federal law, receive from members payments on shares that will comprise the assets of an individual retirement account established by such member as authorized by Section 408 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, or of a Keogh or similar type retirement plan established by or for such member as authorized by Section 401(d) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, or of a retirement plan established by or for such member as authorized by Section 401(k) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended. Payments on shares shall be established in a separate account from the shares of the member, and shall not be subject to pledge to secure loans by the Connecticut credit union to the member nor available for set-off by the Connecticut credit union if the member defaults on a loan. Such shares shall be treated as under separate ownership for purposes of applying any limit imposed by sections 36a-435 to 36a-475, inclusive, on the maximum amount of shares owned by a member. Otherwise, these shares are subject to all of the provisions of said sections relating to shares.

[(g)] (f) A Connecticut credit union may, by written agreement, receive payments on shares which the member agrees not to withdraw within the time period specified in the agreement. Premature withdrawal shall be subject to such penalties as the commissioner may prescribe by regulation, adopted in accordance with chapter 54, except where withdrawal occurs on the member's death or disability, liquidation of the Connecticut credit union or the occurrence of any other condition the commissioner may prescribe by such regulation. The commissioner may by such regulation establish the minimum amount of any such payment on shares which may be subject to such written agreement, the maximum interest rate or rates which may be paid thereon and the time periods for which such rate or rates may be paid. Dividends may be paid at a rate established by such regulation.

[(h)] (g) A Connecticut credit union may receive payments on shares, not exceeding one hundred thousand dollars in the aggregate, from a nonmember who is: (1) An officer, employee or agent of the United States, having official custody of public funds and lawfully investing such funds in the Connecticut credit union; or (2) an officer, employee or agent of the state of Connecticut or of any municipality or other political subdivision thereof having official custody of public funds and lawfully investing such funds in the Connecticut credit union.

[(i)] (h) Except as provided in this subsection, all Connecticut credit unions shall maintain in full force and effect share insurance as provided under the Federal Credit Union Act, as from time to time amended. Any Connecticut credit union that fails to maintain in full force and effect share insurance as provided in this section shall terminate its corporate existence in this state as promptly as possible under such terms and conditions as the commissioner deems appropriate.

Sec. 3. Subdivision (18) of section 36a-316 of the general statutes is repealed and the following is substituted in lieu thereof:

(18) "Time account" means (A) a deposit account with a maturity of at least seven days in which the depositor generally does not have a right to make withdrawals for six days after the account is opened, unless the deposit is subject to an early withdrawal penalty of at least seven days' interest on amounts withdrawn, and (B) a Connecticut credit union member's payment on shares which such member agrees in writing not to withdraw within the time period stated therein as described in subsection [(g)] (f) of section 36a-446, as amended by this act.

Approved May 4, 2001