Other People's Money (OPM) Laws
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What Are "Other People's Money" Laws?
Other people’s money or "OPM" refers to instances where one party is entrusted with holding or keeping money for another party. This is usually done for a specified amount of time, and for a specific purpose. A common example of this is where a person seeks to transfer money to recipient, and uses a trustee to accomplish the transfer.
Here, the trustee is a non-interested third party that will hold the funds until the specified time for the transfer. The trustee may be necessary in cases where the donor doesn’t want the recipient to obtain the money immediately (for instance, they want them to graduate college first). In such cases, the trustee has various duties in terms of the money they are holding. Other examples of OPM situations include when people place their money in a bank, or when a donor invests funds in a company for a small business grant.
What Are Some Common Trustee Duties?
The party holding the money is often entrusted with various tasks and fiduciary duties. These include:
- Keeping the money in a separate account (commingling funds with personal accounts is prohibited)
- Following the instructions for distributions (i.e., time of distribution, etc.)
- Identifying the recipients
- Safeguarding the money or property
In some cases, the donor may require the trustee to invest some of the money that it will grow over time. This must be done according to sound business judgment and reasonable, rational determinations.
What Are Some Common Disputes over Other People’s Money?
Many business disputes revolve around issues involving other people’s money. A common dispute is where the person holding the money begins using the funds for their own purposes. This is prohibited, even if the person intends to pay them back later. The money should not be used for personal gain or personal purposes.
Another example of an OPM dispute is where a financer lends or gives money to a company in the form of a grant. Most grants don’t need to be paid back; however, they often come with conditions. For instance, the financer might require the company to only use the money for specifically stated research purposes. This might be one of the conditions to obtaining the money that is mentioned in the grant contract. Failing to use the money according to their agreement can result in a violation.
Do I Need a Lawyer for Help with Other People’s Money Laws?
Handling money or assets on behalf of another person is a major responsibility. You may need to hire a lawyer if you need assistance with any financial disputes. Your attorney can provide you with legal advice and representation for the matters. Also, if you need to file a lawsuit, your lawyer can provide you with guidance during the trial.
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Last Modified: 02-28-2014 12:53 PM PST
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