December 19, 2001

                                   DO-01-029






MEMORANDUM



TO:       Designated Agency Ethics Officials





FROM:     Marilyn L. Glynn

          General Counsel



SUBJECT:  Recent Office of Legal Counsel Opinion Concerning Status

          of Trustees of a Private Trust Under 18 U.S.C. § 208






     This is to bring to your attention a recent opinion issued by

the Office of Legal Counsel (OLC), Department of Justice,

concerning the application of 18 U.S.C. § 208 to individuals

serving as trustees of a private trust.  See Memorandum of Edward

Whelan III, Acting Assistant Attorney General, to Marilyn L. Glynn,

General Counsel, Office of Government Ethics (OGE), "The Nature of

the Financial Interest of a Trustee of a Private Trust and the

Scope of the Definition of Serving in an 'Organization' as a

'Trustee' under 18 U.S.C. § 208(a)," November 2, 2001, which may be

obtained from OGE's Website, under the "Other Ethics Guidance"

category in the "Laws and Regulations" section, at www.usoge.gov. 

The immediate practical consequence of this opinion is that, in

many situations, employees will not be deemed to have a

disqualifying financial interest in matters affecting the holdings

of a trust in which the employee's spouse or minor child serves as

a trustee.  Nevertheless, consistent with a longstanding executive

branch interpretation, employees still will be deemed to have a

disqualifying interest in particular matters affecting the holdings

of private trusts in which they themselves serve as trustee.



     The opinion distinguishes carefully between "personal" and

"organizational" financial interests under section 208.  With

respect to the former, the opinion concludes, with certain caveats,

that a trustee generally does not have a personal financial

interest in every particular matter that affects the holdings of a

private trust.  In this connection, OLC quotes the letter from OGE

which requested the opinion:



     If . . . the trustee has no beneficial interest, receives

     no fees affected by the performance of trust investments,

     and there are no facts suggesting any potential fiduciary

     liability as a direct and predictable result of the

     particular matter, then one would not necessarily find

     any real potential for gain or loss to the trustee

     personally.


Id. at 2 (quoting Letter of Marilyn L. Glynn to Daniel L. Koffsky,

Acting Assistant Attorney General, March 30, 2001). The mere fact

that a trustee is technically the "legal" owner of the trust

property, under the common law of trusts, does not give the trustee

a personal financial interest in particular matters affecting the

trust property.  For example, if the spouse of an employee serves

as trustee of a trust for the benefit of a neighbor, the spouse

does not automatically have a financial interest in particular

matters affecting the stock holdings of the trust; consequently,

the employee would not invariably be disqualified from

participating in particular matters that directly and predictably

affect the holdings of the trust for which his or her spouse serves

as trustee.  Any suggestion to the contrary in prior OGE issuances

is superseded.  See, e.g., Public financial Disclosure: A

Reviewer's Reference 6-34 (1994).[1]


     Nevertheless, where it is the employee who serves as trustee,

there will still be a disqualifying interest under section 208. 

That is because the interests of certain organizations are imputed

to an employee under the statute.  With respect to imputed

organizational interests, the OLC opinion concludes that an

employee who serves as a trustee of a private trust is a "trustee"

of an "organization," within the meaning of section 208(a). 

Therefore, even where an employee does not have a personal

financial interest in the property of a trust, the interests of a

trust will always be imputed to an employee who serves as trustee

of a private trust.  It is important to remember, however, that the

interests of a trust in which an employee's spouse or minor child

serves as trustee are not imputed to the employee under the

organizational interest provision of section 208(a).


___________________________________________


     1  On a related matter, OGE expects to issue additional 

guidance shortly concerning the reporting of trust holdings on

financial disclosure statements, as well as guidance concerning the 

reporting of assets of an estate for which a reporting individual 

serves as executor or property with respect to which an individual 

has some control pursuant to a power of attorney.


Note: A text file of the OLC opinion can be found at: 


      http://www.usoge.gov/pages/laws_regs_fedreg_stats/lrfs_files/othr_gdnc/olc_11_02_01.txt