Jump to content
Sign in to follow this  
Guest Iwonder

Pledging VEBA assets

Recommended Posts

Guest Iwonder

Can the sponsor of a VEBA pledge the assets as collateral?

We have two trusts for which this question has arisen.

One trust has language in the VEBA indicating that the assets can be pledged, but it is not a well-crafted document and does not indicate the circumstances under which the assets can be pledged.

The second trust is silent on the issue.

Does anyone have an authority to cite? That would be very helpful.

Thank you!

Share this post


Link to post
Share on other sites

Nothing in ERISA addresses this issue other than the fiduciary standards. (The hypothecation transaction must be "prudent".)

The Internal Revenue Code, however, speaks to this issue: such borrowing will likely subject the trust to UBIT under Sections 512-514 of the IRC. (This may also make the transaction imprudent.)

The trust will never permit the "sponsor" to borrow against the trust's assets, only the trustee acting in its fiduciary capacity.

The trust document must permit such borrowing and hypothecation.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×
×
  • Create New...