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Each depositor insured to at least $250,000 per insured bank

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4000 - Advisory Opinions


Insurance Coverage of Deposits Maintained by a Union's Legal Defense Fund

FDIC-88-23

March 10, 1988

Walter F. Doyle, Counsel

Thank you for your March 4 letter regarding insurance coverage for a deposit in your bank in the name of the *** Legal Defense Fund. You inquire whether such deposit would be insured up to $100,000 for each union member.

If the deposit is made by trustees under an irrevocable trust and if the interest of each union member is such deposit can be ascertained without reference to any contingency other than life expectancy, then each member's interest would be separately insured to $100,000. However, it is not clear from your letter that this is a fiduciary deposit under an irrevocable trust. Moreover, even if it is, I am unable to understand how each member's interest in the Legal Defense Fund could be vested and ascertainable. By its very nature, it would seem that any particular member's interest in the fund would be contingent upon his or her being subjected to litigation of a type that triggers reimbursement by the Legal Defense Fund.

It seems to me that the Legal Defense Fund deposit probably represents earmarked union funds, in which event it would be included within the union's overall $100,000 limit at your bank. On the other hand, the Legal Defense Fund might represent excess funds set aside by the union's pension plan trustees to fund litigation costs involving the pension fund, in which event the Legal Defense Fund's deposits at your bank would be insured, in the aggregate, to a separate limit of $100,000 (in addition to the $100,000 limit applicable to deposits at your bank of the union's own funds).

Please let me know if I can be of further assistance, particularly if there are other facts available which you believe might alter the conclusion expressed in this letter.


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