AO 2015-05: Testamentary bequests to party via an escrow agent

A trustee may use an independent third-party escrow agent (the “agent”) to receive and later disburse funds bequeathed to the Libertarian National Committee (the “LNC”). Each year, the agent will disburse to the LNC the maximum amount allowable by the Federal Election Campaign Act (the “Act”) until the funds are exhausted.

Background
Under the terms of the late Joseph Shaber’s trust, trustee Alexina Shaber was to distribute to the LNC a gift of $50,000, plus 50 percent of the residual funds in the trust estate(approximately $175,000). In February 2015, Ms. Shaber disbursed to the LNC $33,400, the maximum contribution to the general account of a national party committee allowed under the Act and Commission regulations, leaving approximately $191,600 to be distributed. The LNC has declined to accept donations to a convention, recount or building fund account established pursuant to the Consolidated and Further Continuing Appropriations Act, 2015, so Ms. Shaber is unable to make additional disbursements this year.

In order to avoid extending the trust administration and incurring related expenses, Ms. Shaber asks if she may make a final distribution of the LNC’s full share under the trust to an independent third-party escrow agent. The LNC will have no control over the funds maintained by the agent, and the agent will not be affiliated with the LNC. Until the funds are exhausted, the agent will disburse to the LNC the full amount allowable under the contribution limits each year.

Analysis
The Act and Commission regulations limit annual contributions by an individual to a national party committee to $25,000 per calendar year, indexed for inflation in odd-numbered years. 52 U.S.C. §30116(a)(1)(B), (c); 11 CFR 110.1(c)(1); 52 U.S.C. §30101(11). In previous Advisory Opinions, the Commission has determined that the testamentary bequest of a decedent is subject to that and other individual contribution limits. AO 2004-02; AO 1999-14.

The Commission approved a proposal similar to Ms. Shaber’s in Advisory Opinion 2004-02 (NCEC), because the terms of the trust limited contributions to the maximum permitted under the Act. The testators or executors of the estates would select the trustees, who would exercise no discretion regarding the amount of contributions. Likewise, the recipient committee would have no involvement in the administration of these trusts, and could not pledge or assign the anticipated funds.

Consistent with that precedent, Ms. Shaber may deliver the remaining amount of the bequest to an independent third-party escrow agent to disburse annually to the LNC the maximum amount permissible under the Act and Commission regulations until the funds are exhausted. The LNC may not control the funds maintained in the escrow account, nor may the committee pledge, assign or otherwise obligate the anticipated contributions before they are disbursed.

Date Issued: August 11, 2015; 4 pages.

Resources:

• Advisory opinion 2015-05 [PDF]