Termination of a legal expense fund.

5 C.F.R. § 2635.1008
in effectEffective: 2024-07-01
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(a) Voluntary termination. A legal expense fund may be voluntarily terminated only for the following reasons: (1) The purpose of the trust is fulfilled or no longer exists; or (2) At the direction of the employee beneficiary. (b) Mandatory termination. An employee's legal expense fund must be terminated within 90 days of the resolution of the legal matter for which the legal expense fund was created or within 90 days of the last expenditure made in relation to the legal matter for which it was created, whichever is later. (c) Excess funds. Within 90 calendar days of termination of the legal expense fund, the trustee must distribute any excess funds to an organization or organizations described in section 501(c)(3) of the Internal Revenue Code and exempt from taxation under section 501(a) of the Internal Revenue Code. Funds from the legal expense fund may not be donated to an organization that was established by the trustee or the employee beneficiary, an organization in which the trustee or the employee beneficiary, their spouse, or their child is an officer, director, or employee, or an organization with which the employee has a covered relationship within the meaning of § 2635.502(b)(1). The trustee has sole discretion to select the 501(c)(3) organization. If practicable, the trustee may return the excess funds to the donors on a pro-rata basis rather than donating the funds to a 501(c)(3) organization. (d) Trust termination report. After the trust is terminated, the employee beneficiary must file a trust termination report that contains the information required by § 2635.1007(d)(1) for the period of the last quarter report through the trust termination date. The report also must indicate the organization to which the excess funds were donated or if the excess funds were returned to donors. The report is due 30 calendar days following the termination date of the trust. Trust termination reports should be filed in accordance with the procedures outlined in § 2635.1007(b). (e) Exception for anonymous whistleblowers. An employee beneficiary who is an anonymous whistleblower may choose to file the trust termination report anonymously through the employee beneficiary's trustee or representative with the Office of Government Ethics.

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